Overview and Background

US stock markets are experiencing significant declines as President Donald Trump's new tariffs create global economic uncertainty. On Friday, the Dow Jones Industrial Average dropped by 5.5%, the Nasdaq Composite fell by 5.8%, and the S&P 500 decreased by nearly 6%. This marks the worst two-day performance for these indices since the onset of the COVID-19 pandemic in March 2020. China has retaliated against the tariffs by announcing a 34% tariff on US goods, raising fears of a global trade war.

Key Developments

Trump's tariffs, which include a 10% base tariff on most trade partners and specific tariffs as high as 50%, were announced on April 2, 2025. Federal Reserve Chair Jerome Powell warned that these tariffs could lead to increased inflation and unemployment, complicating the Fed's ability to respond effectively. The International community, including the European Union and the United Nations, has expressed concerns about the disproportionate impact of these tariffs on poorer nations.

“Trade must not become another source of instability. It should serve development and global growth,” said Rebeca Grynspan, UN Secretary-General of Trade and Development.

Impacts on Global Markets

Asian markets mirrored the US declines, with Hong Kong's Hang Seng Index plummeting by 10.7%, marking its largest intraday decline since the Global Financial Crisis of 2008. Other major Asian markets, including Japan and South Korea, also saw substantial losses. Analysts predict that the ongoing tariff disputes will continue to weigh on market sentiment and economic stability.

Responses and Reactions

In the US, some business leaders and economists have criticized Trump's tariff strategy as overly broad and potentially damaging to the economy. Notable figures like Jamie Dimon and Bill Ackman have warned of rising inflation and recession risks. Meanwhile, the UK government is exploring measures to support affected industries, including automotive and life sciences, as it navigates the fallout from US tariffs.

Key Findings

• The US stock market has seen its worst two-day decline since March 2020 due to Trump's tariff announcements.
• China's retaliation with a 34% tariff on US goods has heightened fears of a global trade war.
• Federal Reserve Chair Jerome Powell predicts increased inflation and unemployment as a result of the tariffs.
• Asian markets experienced significant declines, with Hong Kong's Hang Seng Index down 10.7%.
• Business leaders express concerns over the long-term economic impacts of the tariffs, with calls for Trump to reconsider his approach.