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The Dow Jones Industrial Average fell by approximately 1,000 points on Thursday (April 10), following a significant rally the previous day. The decline came after the White House clarified that tariffs on Chinese imports would rise to 145%, escalating trade tensions between the United States and China. The S&P 500 and Nasdaq Composite also experienced substantial losses, dropping 3.46% and 4.31%, respectively.
According to Yahoo Finance, the market reacted negatively to the unexpected tariff increase, which was initially reported as 125% by President Donald Trump. This clarification led to a sharp downturn in stock prices, reversing the gains from a historic rally on Wednesday.
The tariffs are part of President Trump's broader trade strategy, which includes a 10% baseline tariff on most trading partners and 25% duties on steel, aluminum, and auto imports. Despite a temporary pause on some tariffs, the increased levies on China have reignited fears of a prolonged trade war, potentially impacting the global economy.
CNN reports that the volatility has also affected the US dollar, which fell to its lowest level since early October. Meanwhile, gold prices surged to a record high of over $3,170 per ounce, as investors sought safe-haven assets amid the economic uncertainty.
The escalation in tariffs has also prompted concerns about a potential recession. Economists warn that the ongoing trade tensions could have lasting effects on economic growth, despite the temporary relief from paused tariffs on other countries.
Barron's notes that the market's reaction underscores the unpredictability surrounding the current trade policies. As the situation develops, investors remain cautious, closely monitoring any further announcements from the White House and responses from China.