Global financial markets have been thrown into chaos following Donald Trump’s intensification of his trade war, which has wiped trillions from the value of the world’s largest corporations and sparked concerns over a potential US recession.
As international leaders responded to the US president’s tariff strategy, which they viewed as destructive to global trade, approximately $2.5 trillion was erased from Wall Street and stock indices in major financial hubs worldwide.
Analysts warned that the sweeping tariffs, ranging between 10% and 50%, applied indiscriminately to both allies and adversaries, had significantly raised the risk of a severe global downturn and economic contraction in the US.
Condemnation was widespread, with criticism emerging from both Brussels and Beijing. China denounced what it described as unilateral bullying, while the European Union signalled its intent to implement countermeasures.
The impact became evident when Asian markets opened, triggering a worldwide sell-off reminiscent of financial meltdowns during the coronavirus pandemic and the 2008 crisis. Market declines extended across Asia and Europe, with the UK’s FTSE 100 closing 133 points lower at 8,474, suffering its worst daily drop since August.
In the US, the main stock indices recorded their most significant losses since June 2020. The Nasdaq, dominated by technology firms, fell by 5.97%, while the S&P 500 and Dow declined by 4.8% and 3.9%, respectively. Apple and Nvidia, two of the most valuable American companies, lost a combined $470 billion in market capitalisation by midday.
Experts remarked that investors were increasingly alarmed by Trump’s apparent reluctance to adjust his approach despite financial upheaval. Some still hope he would eventually reach agreements with trading partners.
The US dollar plummeted to a six-month low, falling 2.2% on Thursday morning, reflecting eroding confidence in a currency long considered a global safe haven.
The steepest share price declines affected US corporations reliant on intricate global supply chains, particularly those with significant operations in countries targeted by new border taxes. Apple, which manufactures most of its consumer electronics in China, saw its stock fall by 9.5% by the close of trading. Major multinational firms such as Microsoft, Nvidia, Dell, and HP also recorded sharp losses.
Commodity prices tumbled amid escalating economic fears, with oil suffering a 7% decline.
Speaking on Thursday, Trump likened his trade policies to a medical procedure, asserting that the current turbulence was an expected phase of economic realignment. He insisted that markets, stocks, and the broader economy would experience significant growth as a result. Later, he claimed that numerous nations were now willing to negotiate with the US, asserting that they would not have been as cooperative under previous circumstances.
Criticism of Trump’s tariff plan has intensified, with lawmakers in the US and foreign governments voicing strong opposition. Senior Republican senator Mitch McConnell characterised the policy as flawed, while Canada, historically a close American ally, described the tariffs as unjustified and unwelcome.
Some of the world’s poorest nations are set to suffer the greatest impact, particularly in Southeast Asia. Myanmar, still struggling from an earthquake and civil unrest following a military coup in 2021, faces a 44% tariff. Cambodia, where one in five people live below the poverty line, was subjected to a 49% tariff, the highest in the region, while Vietnam was hit with a 46% rate.
Economic analysts warned that industries reliant on Southeast Asian manufacturing, such as garment and sportswear production, would experience increased costs, which would be passed on to global consumers. Shares of major brands including Nike, Adidas, and Puma fell sharply in response.
Governments worldwide scrambled to assess their response. The UK, which faced the lowest tariff rate of 10%, hinted at possible retaliation while continuing efforts to secure an economic agreement with Washington. Business secretary Jonathan Reynolds told MPs that while securing a deal with the US remained a priority, the UK reserved the right to take necessary countermeasures should negotiations fail.
European leaders reacted with frustration. French president Emmanuel Macron condemned the 20% tariffs imposed on EU goods as excessive and unfounded, while Germany’s outgoing chancellor, Olaf Scholz, described the move as fundamentally misguided. Spanish prime minister Pedro Sánchez argued that such protectionist measures were detrimental to both European and American citizens.
The EU is expected to introduce retaliatory tariffs in mid-April targeting emblematic US consumer and industrial goods, including orange juice, denim, and Harley-Davidson motorcycles, as part of its response to Trump’s tariffs on steel and aluminium.
