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By: Gabriel Barajas, Staff Writer.
U.S. stock markets entered bear territory this week following President Donald Trump’s announcement of sweeping reciprocal tariffs. Market reactions were immediate and severe, with financial systems worldwide facing disruption amid fears of recession and ongoing trade uncertainty.
On Monday, the Dow Jones dropped 1,200 points in early trading. The Nasdaq followed with a loss of over 4%, and the S&P 500 declined by nearly 4%, marking its worst performance since the early COVID-19 crash in 2020. This downturn came after Trump revealed a 10% baseline tariff on all imported goods, effective April 5, with additional charges based on country-specific trade balances.
In the two days following the announcement, more than $5 trillion was erased from the total value of U.S. stocks. International markets mirrored the decline: Japan’s Nikkei fell close to 8%, and Hong Kong’s Hang Seng dropped more than 13% in its steepest single-day fall since 1997. European markets including the FTSE 100 and Germany’s DAX saw declines between 1% and 3%.
“This may yield benefits in the long term,” said Praveen John, managing director at investment firm Paleo Leon, “but in the short term, markets are in for a painful adjustment.”
Major tech and manufacturing sectors across Asia were hit hard. Taiwan’s TSMC and Foxconn halted trading due to rapid losses, while South Korea’s Samsung and Australia’s ASX 200 experienced notable dips. Even gold, often seen as a safe haven, dropped significantly in value.
President Trump stood firm on the policy despite the negative market response. He addressed the public on TruthSocial, stating, “The United States has a chance to do something that should have been done DECADES AGO… Be Strong, Courageous, and Patient, and GREATNESS will be the result!” He later added during a press briefing that “sometimes you have to take medicine to fix something,” showing no indication of stepping back from the tariffs.
Adding to the turbulence, a rumor on Monday falsely suggested that Trump might temporarily pause the tariffs for 90 days. This briefly lifted the markets, with the Dow jumping nearly 900 points. However, the White House promptly denied the claim, and the surge reversed just as quickly. The market’s reaction underscored the high sensitivity and uncertainty surrounding the policy.
Concerns about a possible recession are growing. JPMorgan Chase & Co. warned that the tariffs could trigger a contraction in the U.S. economy. Chief economist Michael Feroli projected a decline in GDP, while CEO Jamie Dimon highlighted the inflationary risks and broader economic slowdown that could follow.
Other markets also felt the effects. U.S. Treasury yields declined slightly, the dollar gained strength, and cryptocurrencies saw mixed reactions—Bitcoin rose above $84,000 while Ether showed only modest gains.
The tariffs have also sparked concern among global leaders. Japan’s Prime Minister Shigeru Ishiba called for urgent dialogue, stressing his country’s significant investment in the U.S. Taiwan offered to increase imports from America to help lower trade tensions. In Europe, U.K. Prime Minister Keir Starmer emphasized the importance of international cooperation in maintaining market stability.
China’s response has been particularly forceful. The country issued a 34% retaliatory tariff on all U.S. goods and urged for fair negotiations. Chinese officials labeled the tariffs as “reckless,” asserting that they have experience handling such conflicts and are prepared for continued pushback.
Analysts are still trying to assess the broader impact. Investor Bill Ackman warned that the current strategy could undermine international trust in the U.S. as a reliable trading partner. “Blanket tariffs on both allies and rivals alike risk destabilizing the global economy,” he said.
Nathan Thooft, senior portfolio manager at Manulife Investment Management, noted that ongoing volatility is likely. “It will take time to navigate the number of countries involved and work through negotiations. In the meantime, uncertainty is the new normal.”
The S&P 500 remains close to a 20% decline from its peak, a common marker for a bear market. For investors, this threshold reflects more than a dip—it signals prolonged uncertainty and a shift in sentiment.
While the long-term outcomes of the new trade policy remain unclear, the immediate consequences are visible: declining market confidence, international tensions, and economic unpredictability. As financial leaders and governments navigate this evolving situation, the world is watching closely. While the road ahead may be uncertain, the resilience and adaptability of the American economy should not be underestimated. Through past downturns, innovation and determination have helped the country recover stronger each time—and there is every reason to believe that, with wise leadership and cooperative effort, that cycle of renewal will continue.