US stock market collapse was the biggest since the coronavirus pandemic

The Trump administration’s imposition of higher-than-market-expected tariffs has sent the US stock market crashing, potentially setting off a financial crisis in the US and around the world.

US stock indexes fell sharply yesterday: the Dow Jones Industrial Average fell 3.98%, the S&P 500 fell 4.84%, and the Nasdaq Composite fell 5.97%. The three major indexes had their worst day since 2020. They fell to their end-August lows, completely erasing the gains they made after Trump won the election (on an optimism that is not logical, since Trump is doing exactly what he promised in his speeches about US isolationism and tariffs…).

Amid falling stocks, the dollar fell 4% against a basket of world currencies, and the yield on 10-year U.S. Treasury bonds hit its lowest level since October as traders exited stocks and moved into more stable bonds.

Global stock markets also fell sharply on Thursday. The Euro Stoxx 50 index fell 3.59% to a 2.5-month low, China’s Shanghai Composite index fell -0.24%, and Japan’s Nikkei Stock 225 fell 2.77% to an almost 8-month low.

The euro rose 2.2% against the dollar, and the Japanese yen rose 1.9%. Investors are bracing for negative economic consequences as the new tariffs weigh on the economy, while the dollar is losing its position as the primary and reserve currency for international trade.

Apple, Adidas, and Puma shares each lost 10%, while Nike lost 15%, as their factories are located in China or Vietnam, making their products more expensive in the U.S. After the 20-34% tariff increase, total tariffs on Chinese goods in the U.S. will rise to 67%!, on Japanese goods to 46%, and on EU goods to 39%.

In addition to the decline in the US economy, we should expect a sharp decline in production and an intensification of the creeping crisis in China, which has already been observed since the Covid era, although the Chinese government has contained the situation with the help of stimulus measures.

The idea of introducing import duties and reducing the US trade deficit, which exceeds $1 trillion, is generally correct, but it will only improve the situation in the long term, when the main production will be transferred to the US. Now, the situation needs to be maintained so that the world does not end up in crisis.

Market attention is focused on the reaction of other countries to President Trump’s “tariff war” and the imposition of tariffs on American goods in response, which will also hit exports from the United States and further deepen the crisis in the country.