U.S. stocks plunged at the opening bell Thursday after President Donald Trump rocked global markets by announcing tariffs on almost all imports into the country.
The S&P 500 tumbled more than 4%, the Dow Jones Industrial Average fell 3.7% or 1,700 points, and the tech-heavy Nasdaq sold off by nearly 5%. Those market swings wiped out trillions of dollars of value in the first few minutes of trading.
Retail stocks were among some of the hardest hit, as Trump’s tariffs on major manufacturing and exporting nations such as China could reach as high as 54%. Lululemon plummeted 10%, Nike dropped 11%, and Ralph Lauren declined around 11.5%.
Small business are also set to be hit hard by the tariffs. The Russell 2000 index, which makes up the smaller publicly traded companies, was down 4%. It has now lost nearly 20% since its peak in November.
For decades, American shoppers have served as the “consumer of last resort” for world markets. Under this implicit arrangement, other countries make products at relatively low cost that U.S. consumers buy — producing the extensive trade deficits Trump has long bemoaned.
But as the president emphasized in his Rose Garden speech Wednesday, this setup has cost the U.S. manufacturing jobs — though technological advancements have also played a role.
Some parts of the country have managed the transition to a services-driven economy better than others, and it took decades for median inflation-adjusted earnings to eclipse their late-1970s levels. Indeed, real median earnings for male workers only just returned to those levels in the past quarter.
The problem, many economists warn, is that the genie can’t be put back in the bottle without causing U.S. wages to fall further. When Trump displayed a chart Wednesday showing how much other countries are “charging” the United States, he was really describing the extent of the country’s trade deficit with each of them.
Zeroing out those imbalances would require the labor-intensive, low-wage work now being done in developing nations like Cambodia or Vietnam to instead be performed in the United States — a reversal that would likely make the average American worker poorer and crimp their spending power.
This is one reason so many analysts responded so negatively to the tariff rollout Wednesday, with reactions such as “worse than the worst-case scenario,” “a perfect recipe for stagflation” and warnings that “many countries will likely end up in a recession.”
Overnight, the 25% tariffs on auto imports Trump unveiled last week also took effect. Tariffs of 25% on foreign-made auto parts will be implemented no later than May 3, meaning that essentially any car sold in the U.S. will face a tariff by this time next month.
Markets were already battered heading into Trump’s latest tariff rollout. The S&P 500 and Nasdaq just recorded their worst quarter in years, largely due to growing uncertainty around the impact of the president’s evolving trade policies.
U.S. stocks were not the only ones facing major selling. Around the world, Japan’s main stock index slid 2.7% and Europe’s Stoxx 600 was down more than 2.2%. The U.K.’s FTSE 100 saw declines of around 1.5% as German, French and Italian each markets tumbled around 3%.
