China Retaliates Against Trump Tariffs

China retaliates against Trump tariffs escalating what is now considered the most significant trade war in a century. The decision triggered a second consecutive day of sharp losses in global markets and sparked renewed alarm among investors.

Global Markets in Freefall

Major U.S. indexes dropped sharply on Friday, marking Wall Street’s worst week since the Covid-19 crisis. Economic factors, not a pandemic, triggered the downturn. Trump’s tariff offensive spurred Beijing’s strong countermeasures. This situation created significant volatility in the markets.

Market Reactions and Analyst Commentary

“The best way to describe this week is a self-inflicted market purge,” said Callie Cox, chief strategist at Ritholtz Wealth Management. The scale of the impact left investors reeling, forcing a rapid repositioning of portfolios.

Red Numbers and Tech Collapse

The Dow Jones plunged over 3,000 points this week, a 7.8% drop, entering correction territory. The Nasdaq fell 10%, officially entering a bear market, while the S&P 500 declined by 9%. The seven major tech firms lost a combined $1.5 trillion in market capitalization in just two days.

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China’s Retaliation and Rhetorical Counterattack

China announced an additional 34% tariff on all U.S. imports, effective April 10. On social media, Trump fired back: “China made a mistake. They panicked.” Global attention now turns to future retaliations and broader consequences.

Recession Fears and Fed’s Position

Despite a strong jobs report—with 228,000 new jobs added in March—markets shrugged off the positive data. Investors fled to Treasury bonds, sending the 10-year yield below 4%, reflecting recession concerns. Jerome Powell stated that the Federal Reserve would take action if tariffs lead to sustained inflationary pressures.

Volatility Surge and IPO Suspensions

The VIX index climbed to 43.21, approaching its highest level since April 2020. Consequently, key IPOs faced disruption. StubHub and Klarna postponed their public offerings amid rising uncertainty. Additionally, European and Asian markets mirrored the sell-off, with the Nikkei 225 and Stoxx 600 posting their worst weeks since March 2020.