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US stock markets tumbled on Thursday as investors parsed the sweeping change in global trading following Donald Trump’s announcement of a barrage of tariffs on the country’s trading partners.
All three major US index funds were down as trading started on Thursday morning. The tech-heavy Nasdaq fund was down 4.5%, while S&P 500 and the Dow dropped 3.4% and 2.7% at opening, respectively.
Meanwhile, the US dollar hit a six-month low, going down at least 2.2% on Thursday morning compared to other major currencies.
Though the US stock market has been used to tumultuous mornings over the last few weeks, US stock futures – an indication of the markets likely direction – had plummeted after the announcement. Hours later Japan’s Nikkei index slumped to an eight-year low and was followed by falls in stock markets in London and across Europe.
The White House drafted up a list of countries, including some of its largest trade partners and ones uninhabited by humans, that will be receiving reciprocal tariffs. Many economies will see new tariffs above 20%, including the EU, China, Japan and Taiwan.
The 10% baseline tariff will go into effect on 5 April, while the reciprocal tariffs will begin 9 April, according to the White House.
Economists have for months warned that high tariffs are a major risk to the US economy, pushing prices up for consumers on everything from cars to wine along with destabilizing the US’s role in the global economy.
But that didn’t stop Trump from taking a celebratory tone at the event he dubbed “liberation day”. Trump tried to paint the tariffs as the start of “the golden age of America”.
“We are going to start being smart and we’re going to start being very wealthy again,” Trump said.
On Thursday Howard Lutnick, the commerce secretary, defended the move. “This is the reordering of fair trade,” he said on CNBC’s Squawk Box. “I expect most countries to start to really examine their trade policy towards the United States of America, and stop picking on us.”
Multiple major American business groups have spoken out against the tariffs, including the Business Roundtable, a consortium of leaders of major US companies including JP Morgan, Apple and IBM, which called on the White House to “swiftly reach agreements” and remove the tariffs.
“Universal tariffs ranging from 10-50% run the risk of causing major harm to American manufacturers, workers, families and exporters,” the Business Roundtable said in a statement. “Damage to the US economy will increase the longer the tariffs are in place and may be exacerbated by retaliatory measures.”
In a statement, the National Retail Federation, a lobbying group for the retail industry, said that the new tariffs negatively impact the business environment for retailers.
“More tariffs equal more anxiety and uncertainty for American businesses and consumers. While leaders in Washington may not care about higher prices, hardworking American families do,” the group said.
Contrary to what Trump has said about the jobs the tariffs will create, the National Association of Manufacturers said that tariffs actually “threaten investment, jobs, supply chains and, in turn, America’s ability to outcompete other nations and lead as the preeminent manufacturing superpower”.
The tariffs also appear unpopular among voters. A poll released on Wednesday ahead of Trump’s announcement found that just 28% of Americans believe tariffs help the economy, while 58% believe the impacts will be damaging.
But in his speech yesterday, Trump appeared ready to be defiant against any criticism.
“In the coming days, there will be complaints from the globalists and the outsources and special interests and the fake news,” he said. “This will be an entirely different country in a short period of time. It’ll be something the whole world will be talking about.”
