Trump Tariffs Spark Worst Meltdown Since 2020

US stocks cratered on Friday with the Dow Jones Industrial Average (^DJI) plunging more than 2,200 points after China stoked trade-war fears and Fed Chair Jerome Powell warned of higher inflation and slower growth stemming from tariffs.
The Dow pulled back 5.5% to enter into correction territory. Meanwhile, the S&P 500 (^GSPC) sank nearly 6%, as the broad-based benchmark capped its worst week since 2020. The tech-heavy Nasdaq Composite (^IXIC) dropped 5.8% to close in bear market territory.
The major averages added to Thursday's $2.5 trillion wipeout after China said it will impose additional tariffs of 34% on all US products from April 10 — matching the extra 34% duties imposed by Trump on Wednesday.
That ramped up investor worries that countries are more likely to retaliate than negotiate, leading to a protracted global trade war.
Investors flocked to government bonds as the 10-year Treasury (^TNX) yield fell to 3.9%, nearing its lowest levels since October.
Economists are warning that with tariffs as-is, the risk of a US recession is rising. The monthly jobs report, unusually overshadowed Friday, showed a labor market that held steady ahead of Trump's biggest tariffs. The US added 228,000 jobs in March, beating estimates, though the unemployment rate ticked up to 4.2%.
Meanwhile, Federal Reserve Chair Powell for the first time addressed the reality of the tariffs, saying they were "higher than anticipated." He said it is "too soon to say" what the proper rate path should be. Traders have ramped up bets on interest rate cuts this year to five, as the Fed is expected to set its efforts to cool inflation aside to tackle the bigger risk of economic slowdown.
Trump, posting on Truth Social on Friday, added to fears by saying that his policies "will never change" and warning that China "played it wrong."
Brian Evans, Alex Harring and John Mellow of CNBC also report Dow drops 2,200 points Friday, S&P 500 loses 10% in 2 days as Trump’s tariff rout deepens:
The stock market was pounded for a second day Friday after China retaliated with new tariffs on U.S. goods, sparking fears President Donald Trump has ignited a global trade war that will lead to a recession.
Here’s a tally of the stock market damage:
- The Dow Jones Industrial Average dropped 2,231.07 points, or 5.5%, to 38,314.86 on Friday, the biggest decline since June 2020 during the pandemic. This follows a 1,679-point decline on Thursday and marks the first time ever that it has shed more than 1,500 points on back-to-back days.
- The S&P 500 nosedived 5.97% to 5,074.08, the biggest decline since March 2020. The benchmark shed 4.84% on Thursday and is now off more than 17% off its recent high.
- The Nasdaq Composite home to many tech companies that sell to China and manufacture there as well, dropped 5.8%, to 15,587.79. This follows a nearly 6% drop on Thursday and takes the index down by 22% from its December record, a bear market in Wall Street terminology.
- The selling was broad with only 14 members of the S&P 500 higher on the day. Major market indexes closed at their lows of the session.
China’s commerce ministry said Friday the country will impose a 34% levy on all U.S. products, disappointing investors who had hoped countries would negotiate with Trump before retaliating.
Technology stocks led the bleeding Friday. Shares of iPhone maker Apple slumped 7%, bringing its loss for the week to 13%. Artificial intelligence bellwether Nvidia pulled back 7% during the session, while Tesla fell 10%. All three companies have large exposure to China and are among the hardest hit from Beijing’s retaliatory duties.
Outside of tech, Boeing and Caterpillar — big exporters to China — led the Dow lower, falling 9% and nearly 6%, respectively.
“The bull market is dead, and it was destroyed by ideologues and self-inflicted wounds,” said Emily Bowersock Hill, CEO and founding partner at Bowersock Capital Partners. “While the market may be close to the bottom in the short-term, we are concerned about the impact of a global trade-war on long-term economic growth.”
China’s efforts to respond to Trump’s tariffs extended beyond reciprocal duties of their own. Beijing added several companies to its so-called “unreliable entities list,” which asserts that the firms have broken market rules or contractual commitments. In addition, China opened an antitrust investigation into DuPont on Friday, sinking shares nearly 13%.
The 10-year Treasury yield fell back below 4% Friday as investors flooded into bonds for safety, pushing prices up and rates lower. The CBOE Volatility index, Wall Street’s fear gauge surged above 40, an extreme level seen only during rapid market declines.
Trump appeared to be steadfast in the face of the markets backlash to his tariff blitz announced Wednesday evening, posting on Truth Social Friday that his “policies will never change.”
“The fear now as we go into the weekend [is] the trade war escalates, and the US doesn’t back down,” said Jay Woods, chief global strategist at Freedom Capital Markets.
All told, the S&P 500 dropped 9% on the week, its worst week since the breakout of Covid in early 2020.
Alright, it was a disastrous week in the stock market after Trump announced his tariffs on Wednesday.
The selling has been brutal and it hit all sectors, especially Energy, Technology, Financials and Industrials -- the so-called cyclical sectors:

Even defensive sectors like Staples, Utilities, Real Estate and Healthcare were down this week, there was no place to hide.
Retail stocks were obliterated this week as tariffs hit countries like Vietnam where many retailers manufacture their items:

However, some retail stocks like Nike, The Gap and Deckers Outdoor (DECK) bounced on Friday as news came out that Vietnam will likely sign a deal with the Trump administration to exempt it from tariffs.
The carnage in Technology continued this week with the Nasdaq selling off 11% over the past two days:

This isn't just a Mag-7 story but clearly mega cap tech shares like Apple, Meta, Nvidia and Tesla had a terrible week and are weighing down the Nasdaq and other stock indexes:




Nvidia seems to be in a total freefall and can decline further from these levels and that makes me nervous even if I find the selloff there overdone.
And it's not just tech shares, Financials, Industrials and Energy also had a very rough week:



In total, roughly $11 trillion has been wiped away in the US stock market since January 17th when President Trump took the oath of office to start his second term. Stocks erased a combined $6.6 trillion in value on Thursday and Friday.
I think it's fair to say Trump 2.0 is getting off to a terrible start.
The wealth destruction in the US and all over the world this week is why economists are increasing their risk of a recession.
Keep in mind, the stock market is a leading indicator, it impacts consumer confidence, there's a massive negative wealth effect going on and since consumption is 70% of the economy, it doesn't portend well for economic activity going forward.
What is baffling to most economists are the tariff rates the Trump administration imposed on Wednesday are vastly higher than World Trade data shows:
Trump’s plan established a 10% baseline tariff on almost every country, though many nations such as China, Vietnam and Taiwan are subject to much steeper rates. At a ceremony in the Rose Garden on Wednesday, Trump held up a poster board that outlined the tariffs the administration contends are “charged” to the U.S., as well as the “discounted” tariffs the U.S. would implement in response.
Those reciprocal tariffs are mostly about half of what the Trump administration said each country has charged the U.S. For example, the poster said China charges a tariff of 67% and that the U.S. will implement a 34% reciprocal tariff in response.
However, a report from the Cato Institute said the trade-weighted average tariff rates in most countries are much lower than the Trump administration said. The report is based on trade-weighted average duty rates from the World Trade Organization in 2023, the most recent year available.
The Cato Institute said the 2023 trade-weighted average tariff rate from China was 3%, not the 67% the administration said it was.
The administration said the European Union charges the U.S. a tariff of 39%, but the Cato report said the EU’s 2023 trade-weighted average tariff rate was 2.7%.
In another example, the administration said India imposes a 52% tariff on the U.S., but Cato found that India’s 2023 trade-weighted average tariff rate was 12%.
And the Mickey Mouse formula they used to calculate their tariffs makes you wonder if they're serious or just looking for a shock effect.
Apart from the questionable methodology, the tariffs were not well thought out, instead of slapping a nominal 5% tariff on everyone and then negotiating, they took out the big bazooka.
Whatever the case, these tariffs are the biggest tax since 1968, they are contractionary and they are already backfiring in a spectacular way as a full-blown trade war develops.
The so-called “Mar-a-Lago Accord” to weaken the US dollar is going to end up causing an epic global recession unless they walk these tariffs back soon, like next week.
Admittedly, I am baffled with the Trump administration, reading Trump's posts, listening to Lutnick, Navarro and Bessent this week, I get this uneasy sense they're knowingly trying to crash the global economy.
Perplexing, yes, it will cost Republicans dearly in mid-term elections if the US succumbs to a recession but none of this seems to matter much to Trump and his advisors.
And that's terrifying, there is no end in sight as this colossal policy mistake keeps getting worse.
This is why the path of least resistance is to sell stocks, starting with the riskiest sectors first.
The only good news today was the CBOE Volatility Index (VIX) hit a 5-year high of 46 showing there was real fear as the selloff intensified:

However, I remind my readers the VIX went over 65 in March 2020 when there was real fear due to the pandemic.
Will it hit a new high next week? I hope not but I'm very nervous that without an announcement that they're rethinking their tariff strategy, policy uncertainty will only lead to more selling.
The problem with Trump is he is incapable of admitting when he's wrong and doesn't seem to listen to experts who tell him things he might not like to hear.
Still, the market is sending him and his administration a clear message, back off from tariffs or suffer the consequences.
Will they listen before it's too late? I certainly hope so but have my doubts.
Lastly, here are the best and worst performing US large cap stocks this week (data from barchart.com):


Below, the CNBC HalfTime Report Investment Committee react to the continued market plunge following President Trump's Tariff announcement.
Next, Avery Sheffield, VantageRock senior portfolio manager and CIO; Cameron Dawson, NewEdge Wealth CIO; and Malcolm Ethridge, Capital Area Planning Group managing partner, join CNBC's 'Closing Bell' to discuss how to position amid the market selloff.
Third, Chris Toomey, Morgan Stanley Private Wealth Management managing director, joins CNBC's 'Closing Bell' to discuss how he's advising clients during the market selloff.
Fourth, Kyle Bass, Hayman Capital Management founder and CIO, joins CNBC's 'Power Lunch' to discuss market outlooks in the wake of tariff announcements.
Fifth, Stephen Stanley, chief U.S. economist at Santander U.S. Capital Markets, joins CNBC's 'Power Lunch' to discuss how markets are reacting to tariffs, recession odds, and more.
Sixth, BCA Research Chief Global Investment Strategist Peter Berezin says the worst is yet to come for stocks and he sees the S&P 500 falling to 4,450 by year-end. And he says that call may still be too bullish. He speaks on "Bloomberg Markets."
Lastly, Oaktree Capital co-Chair Howard Marks says credit yields are still very healthy. Speaking with Lisa Abramowicz on "Bloomberg Open Interest," Marks also discusses the impact of the Trump administration's tariffs on the economy and financial markets.
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