Trump's Tariff Measures Shock Global Stock Markets, Panic Spreads
Recently, the Trump administration's tariff policies have once again triggered severe turbulence in global financial markets. Wall Street had previously anticipated that Trump might back down on tariffs, but contrary to expectations, he did not follow the "retreat script" predicted by the market. Instead, he plans to raise tariffs to 20%, a bombshell announcement that sent the already fragile global stock markets into another slump.
The market had long been closely monitoring Trump's tariff policies, with some Wall Street institutions predicting that he might soften his stance under pressure. However, Trump's hardline attitude shattered these illusions. The expected moderate tariff adjustments did not materialize; instead, a more aggressive tariff hike was proposed, covering a wide range of countries—from developed economies like Japan and South Korea to developing nations such as South Africa and Laos. A total of 14 countries were listed as potential targets for punitive tariffs ranging from 25% to 40%.
The news dealt a heavy blow to global stock markets on Monday. U.S. stocks bore the brunt of the impact, with the Dow Jones Industrial Average plunging 422 points in a single day, marking its worst decline in three weeks. The tech sector was particularly hard-hit, with Tesla's stock price dropping more than 8% at one point. As a key pillar of the U.S. stock market, the broad decline in tech stocks reflects market concerns about future economic growth. Tech companies often rely on global supply chains, and higher tariffs would significantly increase their costs for raw materials and product sales, thereby undermining profitability and growth prospects.
The downturn was not limited to U.S. stocks—other major global markets also suffered. Stocks of Japanese and South Korean companies were hit hard, with South Korea's benchmark index plunging and shares of many export-oriented firms collapsing. Japan's stock market also slumped as investors rushed to sell shares, driven by strong risk-off sentiment. This is because both Japan and South Korea have export-dependent economies, and Trump's tariff threats would deal a severe blow to their trade, leading to lower corporate earnings expectations and, consequently, falling stock prices.
Notably, China's A-share market remained relatively resilient during this global market turmoil, with some even joking that "A-shares are laughing at the chaos." This is not because the A-share market has strong upward momentum, but rather because, against the backdrop of a global sell-off, A-shares had already undergone deep adjustments earlier, leaving valuations relatively low. Some capital flowed into A-shares as a safe haven, helping the market withstand the global shock to some extent.
From a macroeconomic perspective, Trump's tariff policies not only cause short-term market disruptions but could also have long-term negative effects on global economic growth. High tariffs would hinder normal international trade, destabilize global supply chains, increase business costs, and dampen global investment and consumption—ultimately slowing global economic growth.
Currently, the market is widely concerned that the Trump administration may further escalate its tariff policies. If this happens, global financial markets could face even greater challenges. The current stock market turmoil may only be the beginning, with potential spillover effects on currency and bond markets. Investors must closely monitor the Trump administration's next moves and adjust their portfolios accordingly to mitigate potential risks.
