Wall Street's Worst Nightmare: Trump Tariffs Trigger $6.6 Trillion Wipeout

TLDR

Table of Contents

Dow futures fell 1,250 points (3.3%) Sunday evening, continuing the worst two-day stretch for stocks in five years
Bitcoin dropped 5.6% to $78,736.93 after previously surging above $100,000 following Trump’s election
China retaliated to US tariffs with a 34% tariff on all US goods, raising fears of a damaging trade war
JPMorgan analysts estimate tariffs will hike taxes on Americans by $660 billion annually
Global markets suffered steep declines, with Japan’s Nikkei falling 8% and Hong Kong’s Hang Seng plunging 13%

The market turmoil that began last week has intensified as US stock futures plunged Sunday evening, signaling more pain ahead for investors. This follows a devastating two-day stretch that wiped away over $5.4 trillion in market value, putting the S&P 500 near bear market territory.

Dow futures dropped 1,250 points, or 3.3%, while S&P 500 futures fell 3.7% and Nasdaq futures tumbled 4.6%. Asian markets were hit hard, with Japan’s Nikkei falling 8% at the open.

The selling pressure wasn’t limited to stocks. US oil prices fell more than 3%, dropping below $60 a barrel for the first time since April 2021. Bitcoin joined the decline, falling 5.6% to $78,736.93 after having surged above $100,000 shortly after Trump’s election.

Global Market Meltdown

The market chaos spread worldwide with European and Asian markets recording heavy losses. Hong Kong’s Hang Seng Index plunged 13%, among its biggest single-day falls. Trading was briefly halted in Japan after futures for the Nikkei 225 dipped below 8%.

In Europe, the Stoxx 600 index and major bourses in the UK, Germany, France, and Italy were all down around 5%. South Korean authorities announced emergency measures, preparing to provide up to $68 billion in liquidity.

The declines follow the worst 48-hour period in market history, with $6.6 trillion in value erased last week. Recession fears have gripped Wall Street as investors worry about the impact of Trump’s tariff regime.

Tariff Impact and Economic Concerns

A universal 10% tariff went into effect Saturday after Trump signed an executive order earlier in the week. On Wednesday, America will impose higher “reciprocal” tariffs on nearly 90 countries with the largest trade imbalances with the United States.

China has retaliated fiercely, announcing a 34% tariff on all US goods starting Thursday. This escalation has raised fears of a damaging trade war that could push both the US and global economies into recession.

JPMorgan analysts said the tariffs would hike taxes on Americans by $660 billion a year and add 2% to inflation. They raised the risk of a recession to 60%, while Goldman Sachs put the probability at about 35%.

The nonpartisan Tax Foundation estimated the average American household will pay $2,100 more annually for goods due to tariffs. America’s average import tax will surge from 2.5% last year to 19% this year – the highest rate since 1933.

Trump’s Response

Despite market turmoil, President Trump has shown little intention of backing down. On Truth Social, he wrote: “THIS IS AN ECONOMIC REVOLUTION, AND WE WILL WIN. HANG TOUGH.”

When asked about the market plunge aboard Air Force One Sunday, Trump said he didn’t intentionally crash markets but declined to predict future market movements.

“What’s going to happen with the market? I can’t tell you,” Trump said. “But I can tell you, our country has gotten a lot stronger, and eventually it’ll be a country like no other.”

Trump indicated he’s open to negotiations, saying he’s spoken with tech executives and world leaders. “They’re being very nice,” he said, adding that he’s “willing to deal with China, but they have to solve their surplus.”

Commerce Secretary Howard Lutnick reinforced that the tariffs aren’t going away anytime soon. “There is no postponing. They are definitely going to stay in place for days and weeks,” Lutnick told CBS News.

The scale of Trump’s proposed tariffs has shocked economists and business leaders. Rather than simply taxing imports, Trump seeks to transform the US economic model away from global trade toward domestic manufacturing.

Some Wall Street figures have expressed alarm, including hedge fund investor Bill Ackman, who warned of “a self-induced, economic nuclear winter” if Trump doesn’t change course. He urged the President to “call a time out” and fix the unfair tariff system more carefully.

Market analysts suggest the selling pressure may continue Monday. “Last week’s brutal selling pressure is set to continue, as investors still lack clarity on the implications of tariffs,” said James Demmert of Main Street Research.

However, Demmert also noted that stocks are now trading at historically cheap levels, which could create buying opportunities. “We are getting close to a bottom,” he said. “When this happens, we tend to soon see important rallies.”

Stay Ahead of the Market with Benzinga Pro!

Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders: