Wall Street suffered its worst week since the onset of the Covid-19 crisis five years ago as investors worldwide balked at Donald Trump’s risky bid to overhaul the global economy with sweeping US tariffs.
The US president doubled down on his plan on Friday, insisting he would not back down even as the chairman of the Federal Reserve warned it would likely raise prices and slow down economic growth.
A stock-market rout continued apace, with the benchmark S&P 500 falling 322 points, or 6%, and the Dow Jones industrial average retreating 2,231.07 points, or 5.2%, in New York. The Dow’s two-day slump has wiped out $6.4tn in value, according to Dow Jones Market Data.
The tech-focused Nasdaq Composite, meanwhile, sank 5.8%, and entered bear market territory, having fallen more than 20% since peaking in December.
Over the week, the S&P 500 fell 9.1%, its worst five-day trading stretch since March 2020.
Trump sought to reverse the slide, but an insistence that his policies “will never change” in an all-caps social media post appeared to only reinforce apprehension over his strategy.
“ONLY THE WEAK WILL FAIL!” he wrote on Truth Social, his social media platform.
China outlined plans to retaliate, setting the stage for an all-out trade war between the world’s two largest economies, as other governments worldwide pulled together their response.
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The sweeping package of tariffs unveiled by Donald Trump on Wednesday includes an exemption for the energy sector, which is a clear sign of the president’s fealty to his big oil donors over the American people, advocates say.
Reports also indicated that Trump only signed off on the details of his bid to drive the world into a new economic era hours before it was unveiled. The US president decided on the final plan at about 1pm on Wednesday, according to the Washington Post. He announced it at 4pm.
The US market declines capped another dismal day for global indices. The FTSE 100 fell 5% in London. The CAC 40 declined 4.3% in Paris. The Nikkei 225 dropped 2.8% in Tokyo.
“It is now becoming clear that the tariff increases will be significantly larger than expected,” the Fed chair Jerome Powell said. “The same is likely to be true of the economic effects, which will include higher inflation and slower growth.”
