As widely predicted by anyone who saw it coming, Trump’s ‘Liberation Day’ tariff announcement yesterday prompted a sell-off on Wall Street, with US sharemarkets suffering their steepest one-day losses in years.
The self-inflicted wound caused the Dow Jones to drop 1,679 points or 4% and the S&P 500 to wipe 4.8% off its value – their worst daily slump since June 2020.
The Nasdaq, replete with tech companies closely associated with the administration, faired even worse, plummeting 1,050 points or 6%, its sharpest fall since March 2020.
Allies hit hard
The US president announced a sweeping 10% tariff on all imports and hit back with so-called "reciprocal" levies on key trading partners, igniting fears of a global trade war.
Some of the country’s closest allies, like the European Union, South Korea, Japan and Taiwan have been slapped with reciprocal tariffs – 20%, 26%, 24% and 32% respectively.
Small but active exporter, Vietnam, has been levied with a whopping 46% tax, while the tiny African nation of Lesotho is, inexplicably, one of the hardest hit nations, with its exports carrying a whopping 50% tariff.
The response from US investors was swift, with technology giants bearing the brunt of the rout.
Apple was down 9.3%, Amazon.com crashed 9%, Tesla continued its slide, down 5.5%, Nvidia shed 7.8% and Meta Platforms fell 9%.
Yet as bad as those numbers seem, personal computer makers were hit even harder, with Dell Technologies falling 19% and HP slashing 15.1% off its value during the session.
Retailers were also at the coalface of some of the new levies on production hubs such as Vietnam, Indonesia and, of course, China.
Big name consumer brands including Nike and Ralph Lauren slumped 14.4% and 16.3% respectively.
Target Corporation lost 10.9% after warning that tariffs would drive up consumer prices.
Financial stocks also fell sharply, with Citigroup and Bank of America losing 12.1% and 11.1%, respectively, as investors reassessed the economic outlook.
The CBOE Volatility Index spiked to a three-week high.
Sell-off in Europe, too
European sharemarkets mirrored the sell-off, with the German, Italian and French indices all down more than 3%.
Eurozone banks and commodity-linked sectors fell over 5%, while manufacturing-exposed consumer goods brands Adidas and Puma tumbled more than 11% apiece.
The FTSEurofirst 300 lost 2.7% and London’s FTSE 100 declined 1.6%.
In US economic data, initial jobless claims fell by 6,000 to 219,000, while the ISM services index dipped to 50.8 in March.
Government bond yields fell as investors sought safety. The 10-year Treasury yield fell by 15 basis points to 4.04%, and the two-year yield declined 20 basis points to 3.70%.
Currencies and commodities
Currency markets saw the US dollar weaken. The Euro ended near US$1.1025, the Australian dollar near US63.20 cents, and the Japanese yen at JPY146.30.
Oil prices tumbled after OPEC+ agreed to accelerate supply increases, with Brent crude falling US$4.81 or 6.4% to US$70.14 per barrel and Nymex crude down US$4.76 or 6.6% to US$66.95.
Base metals fell on trade war concerns, with copper down 4.2% and aluminium off 3%. Gold slid 1.4% to US$3,121.70 per ounce, and iron ore edged down 0.1% to US$104.18 per tonne.