Business
Markets plunge as Trump tariffs deliver shock waves to world economy
US President Donald Trump appears on a television screen at the stock market in Frankfurt, Germany, Wednesday, April 2, 2025. (AP)
NEW YORK, April 3, (AP): Financial markets around the world are reeling Thursday following President Donald Trump’s latest and most severe volley of tariffs, and the US stock market may be taking the worst of it.
The S&P 500 was down 3.3% in early trading, worse than the drops for other major stock markets. The Dow Jones Industrial Average was down 1,160 points, or 2.7%, as of 9:32 a.m. Eastern time, and the Nasdaq composite was 4.5% lower.
Little was spared as fear flared globally about the potentially toxic mix of higher inflation and weakening economic growth that tariffs can create. Prices fell for everything from crude oil to Big Tech stocks to small companies that invest only in U.S. real estate. Even gold, which has hit records recently as investors sought something safer to own, pulled lower. The value of the U.S. dollar also slid against other currencies, including the euro and Canadian dollar.
Investors worldwide knew Trump was going to announce a sweeping set of tariffs late Wednesday, and fears surrounding it had already earlier pulled the S&P 500 10% below its all-time high. But Trump still managed to surprise them with “the worst case scenario for tariffs,” according to Mary Ann Bartels, chief investment officer at Sanctuary Wealth.
Trump announced a minimum tariff of 10% on imports from all countries, with the tax rate running much higher on products from certain countries like China and those from the European Union. It’s “plausible” the tariffs altogether, which would rival levels unseen in roughly a century, could knock down U.S. economic growth by 2 percentage points this year and raise inflation close to 5%, according to UBS.
Such a hit would be so frightening that it “makes one’s rational mind regard the possibility of them sticking as low,” according to Bhanu Baweja and other strategists at UBS.
Wall Street had long assumed Trump would use tariffs merely as a tool for negotiations with other countries, rather than as a long-term policy. But Wednesday’s tariff announcement may suggest Trump sees tariffs more as helping to solve an ideological goal – wresting manufacturing jobs back to the United States, for example – than just an opening bet in a poker game.
If Trump follows through on his tariffs, stock prices may need to fall much more than 10% from their all-time high in order to reflect the global recession that could follow, along with the hit to profits that U.S. companies could take because of them.
“Markets may actually be underreacting, especially if these rates turn out to be final, given the potential knock-on effects to global consumption and trade,” said Sean Sun, portfolio manager at Thornburg Investment management, though he sees Trump’s announcement on Wednesday as more of an opening move than an endpoint for policy.
One wild card is that the Federal Reserve could cut interest rates in order to support the economy. That’s what it had been doing late last year. Lower interest rates help by making it easier for U.S. companies and households to borrow and spend.
Yields on Treasurys tumbled in part on rising expectations for coming cuts to rates, along with general fear about the health of the U.S. economy. The yield on the 10-year Treasury fell to 4.03% from 4.20% late Wednesday and from roughly 4.80% in January. That’s a huge move for the bond market.
The Fed may have less freedom to move than it would like, though. While lower rates can goose the economy, they can also push upward on inflation. And worries about inflation are already worsening because of tariffs. The Fed has no good tool to fix what’s called “stagflation,” where the economy stagnates and inflation stays high.
Worries about that worst-case scenario knocked down stocks across industries, leading to drops for three out of every four stocks that make up the S&P 500.
Nike fell 10.7% because so many of its products are made outside the United States. United Airlines lost 9.2% because customers worried about the global economy may not fly as much for business or feel comfortable enough to take vacations. Discount retailer Dollar Tree tumbled 11.3% amid worries that its customers, already squeezed by still-high inflation, may be under even more stress.
Some of the heaviest weights on the market were those that had soared earlier in Wall Street’s frenzy around artificial-intelligence frenzy. Critics said they were looking the most egregious out of an overall market that was already looking too expensive after their prices ran higher in recent years.
Nvidia sank 5.1% to bring its loss for the year so far to 22%. It had more than doubled last year after more than tripling in 2023. Palantir Technologies, which offers an AI platform for customers, sank 4.1%. Super Micro Computer, which makes servers, lost 8.2%.
In stock markets abroad, indexes fell sharply worldwide. France’s CAC 40 dropped 3.1%, and Germany’s DAX lost 2.4% in Europe.
Japan’s Nikkei 225 dropped 2.8%, Hong Kong’s Hang Seng lost 1.5% and South Korea’s Kospi dropped 0.8%.
A view of the Grand Ethiopian Renaissance Dam in Benishangul-Gumuz, Ethiopia on Sept 9. (AP)
ADDIS ABABA, Ethiopia, Sept 10, (AP): Ethiopia on Tuesday inaugurated Africa’s largest dam to boost the economy, end frequent blackouts and support the growth of electric vehicle development in a country that has banned the importation of gasoline-powered vehicles. As reservoir waters flowed into the turbines of the Grand Renaissance Dam, Ethiopians dressed in colorful regalia viewed the ceremony on large screens across the capital, Addis Ababa, and celebrated the achievement with dancing to traditional music.
“We will have enough power to charge our electric vehicles from the new dam,” said Belay Tigabu, a bus driver in Addis Ababa’s main bus terminal. The almost $5 billion mega-dam, located on the Blue Nile tributary of the Nile River near Ethiopia’s border with Sudan, will produce more than 5,000 megawatts and is expected to double national electricity generation capacity, according to officials. Ethiopia’s Prime Minister Abiy Ahmed, speaking during the launch, said the dam was a “big achievement” that would show the world what Africans are capable of accomplishing.
Dozens of visiting African heads of state and government joined Abiy for the inauguration, with many expressing interest in importing power from Ethiopia. “I am proud to announce we will soon be signing an agreement with the government of Ethiopia to receive electricity from the dam that will benefit our hospitals and schools,” said South Sudan’s President Salva Kiir. Kenyan President William Ruto said his nation is looking to sign a power purchasing agreement with Ethiopia based on the resources of the dam project, which he said was a “pan-African statement.”
Already an importer of Ethiopia electricity, Ruto said Kenya is seeking to alleviate the electricity deficit his country is experiencing. He said the dam “exemplifies the scale and ambition of African-led infrastructure and aligns with the Africa Union’s vision of continental energy connectivity.” But Ethiopia’s new dam has faced controversy, with neighboring Egypt expressing concerns over reduced water flows downstream.
Egypt has long opposed the dam because of concerns it would deplete its share of Nile waters. The Arab world’s most populous country relies almost entirely on the Nile to supply water for agriculture and its more than 100 million people. Tamim Khallaf, a spokesperson for Egypt’s Ministry of Foreign Affairs, told The Associated Press that the dam posed an “existential threat.”
A dealer stands near the screens showing the Korea Composite Stock Price Index (KOSPI), (left), and the foreign exchange rate between US dollar and South Korean won at a dealing room of Hana Bank in Seoul, South Korea on Sept 10. (AP)
TOKYO, Sept 10, (AP): Asian shares mostly rose in early Wednesday trading, echoing record rallies on Wall Street after the latest update on the job market bolstered hopes the US Federal Reserve will cut interest rates. Japan’s benchmark Nikkei 225 gained 0.9% to finish at 43,837.67. Australia’s S&P/ASX 200 added 0.3% to 8,830.40.
South Korea’s Kospi jumped 1.7% to 3,314.66. Hong Kong’s Hang Seng rose 1.1% to 26,223.30, while the Shanghai Composite edged up 0.2% to 3,814.63. Uncertainty is still in the air over US-China tariff issues as bilateral talks continue. US President Donald Trump has raised taxes on imports from China, triggering a tit-for-tat tariff war.
The U.S. is currently charging an additional 30% tariff on Chinese goods and China is charging a 10% tariff under a de-escalation deal reached in May. On Wall Street, the S&P 500 rose 0.3% and squeaked past its all-time high set last week. The Dow Jones Industrial Average climbed 196 points, or 0.4%, while the Nasdaq composite gained 0.4%.
They likewise set records. Traders have become convinced that the Federal Reserve will cut its main interest rate for the first time this year at its next meeting in a week, in order to prop up the slowing job market. A report on Tuesday offered the latest signal of weakness, when the US government said its prior count of jobs across the country through March may have been too high by 911,000, or 0.6%.
That was before President Donald Trump shocked the economy and financial markets in April by rolling out tariffs on countries worldwide. The bet on Wall Street is that such data will convince Fed officials that the job market is the bigger problem now for the economy than the threat of inflation worsening because of Trump’s tariffs.
That would push them to cut interest rates, a move that would give the economy a boost but could also send inflation higher. A lot is riding on Wall Street’s hope that the job market is slowing by just the right amount: Investors have already sent US stock prices to records because of it. Inflation also needs to stay at a reasonable level, even though it looks tough to get below the Fed’s target of 2%. In the bond market, the yield on the 10-year Treasury rose to 4.08% from 4.05% late Monday.
Ethiopia inaugurates Africa’s largest hydroelectric dam as neighbors eye power imports
Asian shares mostly rise, cheered by Wall Street rally to more records
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