Markets Tumble After Trump Unveils Sweeping Tariff Plan
U.S. stocks plunged in after-hours trading Wednesday as President Donald Trump announced broad new tariffs on imports from all trading partners, marking a dramatic escalation of his administration’s protectionist trade agenda. The SPDR S&P 500 ETF Trust dropped about 2% while the tech-heavy Invesco QQQ ETF shed 2.6% following the announcement from the White House Rose Garden.
Speaking at what he called “Liberation Day,” Trump revealed a baseline 10% tariff that will be applied to all imports beginning April 5, with higher rates imposed on countries that levy steeper duties on American goods, according to CNBC.
“We will charge them approximately half of what they are and have been charging us,” Trump declared. “The tariffs will be not a full reciprocal. I could have done that, yes, but it would have been tough for a lot of countries.”
Country-Specific Tariffs
While the 10% rate serves as a baseline, Trump outlined significantly higher tariffs for specific trading partners. The European Union faces a 20% duty, China will be hit with 34%, Vietnam with 46%, and Japan with 24%, Yahoo Finance reported.
Additionally, the president confirmed previously announced 25% tariffs on all foreign-made automobiles will take effect at 12:01 a.m. on April 3. The Commerce Department also revised earlier tariffs to include all beer and empty aluminum can imports, with those duties beginning April 4.
Technology stocks, which have been particularly vulnerable to trade tensions, continued their decline after hours. Nvidia and Tesla each fell approximately 3% following the announcement, extending losses accumulated over the past month as tariff fears intensified.
Stocks tumble after hours as Trump makes tariff announcements.$XLK and $XLY led the sell-off, both falling about 3% in post-market trading. Market-leading stocks like $NVDA, $AMZN, and Tesla $TSLA were all down 4% or more.
— Yahoo Finance (@YahooFinance) April 2, 2025
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Market Reaction
The tariff announcement came after a volatile day of trading that saw U.S. markets ultimately close higher on Wednesday. The S&P 500 finished up 0.7%, the Dow Jones Industrial Average added 235 points (0.6%), and the Nasdaq Composite gained 0.9%.
That optimism quickly evaporated as details of the sweeping tariffs emerged. The S&P 500 has now declined in five out of the past six weeks amid the uncertainty caused by Trump’s tariff announcements, which began rolling out in February. The index briefly entered correction territory on Monday – meaning a 10% drop from its recent high – and experienced its worst monthly percentage decline since December 2022 in March.
Global Response
Trading partners have already begun preparing for the impact of Trump’s trade policies. European Central Bank President Christine Lagarde warned Wednesday that the proposed tariffs “will have a global negative impact,” with the extent of damage depending on “their duration, severity, and whether they result in successful negotiations,” according to Reuters via Yahoo Finance.
The European Union is reportedly developing emergency plans to support sectors that could be most affected by the new duties. Meanwhile, Mexican President Claudia Sheinbaum indicated her country would not engage in a retaliatory trade war, instead promising “a comprehensive program, not a tit-for-tat on tariff.”
Canada’s Prime Minister Mark Carney and Sheinbaum spoke Tuesday about addressing the escalating tensions while “safeguarding North American competitiveness,” according to a statement from Carney’s office.
BREAKING: The market is crashing after Trump's tariff's announcement! pic.twitter.com/pa5vFSaVds
— Data Driven Stocks (@stockdatamarket) April 2, 2025
Economic Warning Signs
The tariff escalation comes as early economic warning signs have begun to emerge. Data released Tuesday showed U.S. manufacturing activity slipped into contraction for the first time this year, with uncertainty around Trump’s trade policies weighing on suppliers and driving costs higher.
Financial analysts have started to sound alarms about the potential economic impact. Peter Berezin, chief strategist at BCA Research, warned investors to prepare for a “leaner stock market” and economy as the tariffs and inevitable retaliations from trading partners take effect.
The combined effect of these tariffs comes on top of previous duties imposed since February, including 25% tariffs on Canada and Mexico, an additional 10% on China, and 25% import tariffs on steel and aluminum.
Those earlier announcements prompted retaliatory measures from U.S. trading partners. China responded with up to 15% duties on American farm goods, while Canada imposed new tariffs on about $20 billion of U.S. products. The EU has announced counter-tariffs on $28 billion in American goods set to begin in April.
As markets digest the full implications of these sweeping trade measures, uncertainty about their economic impact and the potential for further escalation will likely continue to influence investor sentiment in the coming weeks.
