Stocks around the world took a sharp downturn on Thursday, following US President Donald Trump’s announcement of sweeping new tariffs. Investors and traders expressed mounting concerns over how businesses and households will absorb the costs of these measures, raising fears of a potential global economic slowdown.
In the US, the S&P 500, which tracks the largest 500 American firms, opened more than 3% lower. Losses worsened throughout the day, with high-profile consumer brands such as Nike and Apple seeing significant declines. The Dow Jones also dropped over 3%, and the Nasdaq fell by more than 4%. The uncertainty sent ripples through global markets, with Europe and Asia following the downward trend.
In Europe, the FTSE 100 index in the UK dropped by 1.5%, while Germany’s Dax and France’s CAC 40 fell by around 2% and 2.9%, respectively. Meanwhile, Asian markets also felt the impact, with Japan’s Nikkei closing down nearly 3% and Hong Kong’s Hang Seng dropping 1.5%.
The tariff announcement, which includes a blanket 10% tax on imports and higher duties on key trading partners such as China and the European Union, sent shockwaves through global markets. Notably, China’s goods face a 54% tariff, and Vietnam’s products will be subject to a 46% duty. In response, the price of gold, seen as a safe haven during times of economic instability, surged to a record high of $3,167.57 an ounce before retracting to $3,090.
Concerns about the tariffs’ impact on global growth have intensified. Analysts warn that the new taxes could stoke inflation and potentially derail economic expansion. Jay Hatfield, CEO of Infrastructure Capital Advisors, called the situation “the worst-case scenario.” In response to the tariffs, many firms now face tough decisions: whether to absorb the new costs, pass them on to consumers, or share the burden with business partners. This decision could significantly affect both US and global economies, given that US consumer spending constitutes roughly 10% to 15% of the world economy.
In the US, economists are warning that these tariffs could contribute to a recession unless coupled with other measures, such as large tax cuts, which Trump has promised. Seema Shah, chief global strategist at Principal Asset Management, noted that while the tariffs might eventually lead to reshoring of manufacturing, this would likely take years, with few short-term benefits for the economy.
Among the hardest-hit companies was Nike, whose shares fell more than 11% as a result of the tariffs, given its reliance on Asian manufacturing. Apple, which depends heavily on China and Taiwan, saw its shares drop by 9%. Other retailers, including Best Buy and Target, also saw significant declines, with shares dropping 12% and 9%, respectively. Harley-Davidson, a company already subject to EU retaliatory tariffs in the past, saw a 4.5% drop, as the threat of additional tariffs looms.
In Europe, companies such as Adidas and Puma, which rely heavily on global supply chains, saw their shares fall by more than 10% and 9%, respectively. Luxury goods companies were also affected, with Pandora’s shares falling more than 12%, and LVMH (Louis Vuitton Moet Hennessy) dropping by 5%.
As the global economic outlook grows increasingly uncertain, all eyes will be on the US as it navigates the impact of these aggressive tariff policies. With global trade in turmoil, businesses, governments, and consumers alike are bracing for the fallout.
