Global markets experienced a continued sell-off as nations worldwide reacted to US President Donald Trump’s trade war, while the White House maintained that the American economy would ultimately prevail.
Shockwaves reverberated through markets across the United States, Europe, and Asia following Mr. Trump’s tariff announcement, with foreign leaders indicating a willingness to negotiate but also warning of potential counter-tariffs.
The S&P 500 fell 4.8%, marking its largest decline since 2020. The tech-heavy Nasdaq dropped 6.0%, while the Dow Jones decreased by 4.0%.
Japan’s primary Nikkei 225 index fell by more than 3% in afternoon trading, with Prime Minister Shigeru Ishiba calling Mr. Trump’s tariffs a “national crisis.”
Additional tariffs of 25% on all foreign-made vehicles also took effect, prompting Canada to swiftly impose a similar tax on US imports.
Stellantis, which owns Jeep, Chrysler, and Fiat, halted production at several assembly plants located in Canada and Mexico.
(Watch: Donald Trump asserts the market’s response to tariffs was anticipated)
Mr. Trump downplayed the market chaos, telling reporters as he departed for a weekend at his Florida golf resort that stocks would “boom.”
Vice President JD Vance, in an interview with Newsmax, also downplayed the market fluctuations.
“In some ways, I thought it could be worse in the markets, as this is a significant transition,” Mr. Vance stated.
Read more: Follow ongoing developments following the tariff announcements; Ministers to discuss US tariffs with employers and union leaders
‘Trust Donald Trump’
Mr. Trump has expressed a desire to free the United States from dependence on foreign manufacturers, undertaking a considerable economic transformation that he compared to a medical procedure.
“I believe it’s going remarkably well. It was an operation. Like when a patient undergoes surgery, and it’s a significant event. I said this operates exactly as it should,” he stated.
“It’s exactly what was expected,” the 78-year-old president remarked regarding the market’s response. “The patient was quite ill. The economy faced numerous issues.”
“It underwent a procedure. It’s going to be a thriving economy. It’s going to be incredible.”
(Watch: Donald Trump claims the UK is pleased with tariff treatment)
Despite protests from abroad and concerns among some Republicans about rising prices domestically, Commerce Secretary Howard Lutnick urged patience.
“Let Donald Trump manage the global economy. He knows what he’s doing,” Mr. Lutnick commented on CNN.
Mr. Trump directed some of his strongest criticism toward “nations that treat us poorly.”
This included an extra 34% tariff on goods from China, raising the total tariff rate there to 54%.
For the European Union, the tariff rate was set at 20%, and 24% on Japan.
Donald Trump presented a list of tariffs to be imposed on the EU, China, the UK, and other countries on Wednesday.
China demanded the immediate cancellation of the tariffs and promised retaliatory measures, while France and Germany cautioned that the EU could retaliate against US technology companies.
French President Emmanuel Macron advocated for a suspension of investments in the United States until the so-called “brutal” new tariffs were “clarified.”
IMF leader Kristalina Georgieva warned that the tariffs “clearly pose a significant risk to the global outlook.”
She urged Washington and its trading partners to work “constructively” to alleviate tensions and decrease uncertainty.
Gold, a safe-haven asset, reached a record price, oil prices declined, and the dollar weakened against other major currencies.
Global economic ‘sumo wrestler’
Ngozi Okonjo-Iweala, head of the World Trade Organization, which oversees global trade, cautioned that the upheaval could lead to a contraction of “one percent in global merchandise trade volumes this year.”
Republican Senator Mitch McConnell diverged from Trump, criticizing tariffs as “bad policy.”
Maintaining long-term prosperity “requires collaboration with our allies, not opposition,” McConnell remarked.
Mr. Trump indicated he would negotiate “as long as they offer something beneficial.”
The 27-nation EU and other nations have sought negotiations while refraining from immediate retaliation.
Beijing stated it was “maintaining communication” with Washington regarding trade matters, and EU trade chief Maroš Šefčovič planned to engage with US counterparts today.
However, White House spokeswoman Karoline Leavitt informed CNN earlier that the president was clear: “this is not a negotiation.”
Mr. Lutnick also adopted a firm stance, asserting, “You can’t really clash with the United States.”
“You’re going to lose. We are the sumo wrestler of this world.”
