World stocks, the dollar, and oil prices plummeted Thursday as Donald Trump’s dramatic new U.S. trade tariffs sparked widespread fears of a global recession, sending investors rushing toward safe-haven bonds and the Japanese yen.
The announcement of a baseline 10% tariff on imported goods plus additional “reciprocal” tariffs on numerous countries that Trump claimed maintained unfair trade barriers left traders visibly shaken by their severity.
In Europe, where the 27-country EU bloc now faces a 20% reciprocal levy, markets fell between 1.3% and 2% as Brussels and other capitals expressed outrage. Wall Street futures dropped 3% ahead of what was anticipated to be a volatile U.S. market opening later. The dollar’s 2% decline was on track to be its worst daily performance since November 2022.
Asian markets, targeted by some of the harshest tariffs, saw Tokyo drop 2.7%, heading toward its worst week in nearly two years.
JPMorgan analysts stated the tariffs were “significantly higher than the realistic worst-case scenario” previously considered. Credit rating agency Fitch warned they represented a “game-changer” for both the U.S. and global economy, while Deutsche Bank described them as a “once in a lifetime” event that could potentially reduce U.S. growth by 1%-1.5% this year.
“Many countries will likely end up in a recession,” said Fitch’s Olu Sonola. “You can throw most forecasts out the door if this tariff rate stays on for an extended period of time.”
The rush for ultra-safe government bonds drove U.S. Treasury yields toward 4% and Germany’s 10-year yield, the European benchmark borrowing rate, decreased 8.5 basis points to 2.64%. These new tariffs will raise effective import taxes in the world’s largest economy to the highest levels in a century. If they trigger recessions, central banks worldwide would likely cut interest rates, benefiting bonds.
S&P 500 and Nasdaq futures both fell over 3% before what was expected to be a challenging Wall Street restart. Apple was down 6.5%, affected by tariffs on China where much of its manufacturing is based. Amazon.com dropped over 5%, Microsoft 1.8%, while AI leader Nvidia declined 3.5%. This comes after trillions of dollars have already been wiped from the ‘Magnificent Seven’ tech giants this year as concerns have grown.
Trump’s tariffs hit Asia particularly hard. China received a 34% tariff, Japan 24%, South Korea 25%, and Vietnam 46%. Vietnamese stocks plunged 6.7% in response, while Nike, Adidas, and Puma, all of which source heavily from Vietnam and other Asian producers, fell as much as 10%.
The risk-sensitive Australian dollar also declined as it was impacted. With China, Canada, and Europe all promising retaliatory measures, investors were selling exposure to global growth. Oil, an indicator of economic activity, dropped as much as 4% in London, pushing Brent below $72 a barrel and firmly on track for its worst day of the year.
Gold reached a record high above $3,160 an ounce before losing momentum, while Japan’s yen strengthened more than 1.5% to 147.01 per dollar as forex traders sought safety outside the U.S. dollar. The Swiss franc, another traditional safe haven, reached its strongest level in four months as the euro surged 2% to $1.10.
“Eye-watering tariffs on a country-by-country basis scream ‘negotiation tactic’, which will keep markets on edge for the foreseeable future,” said Adam Hetts, global head of multi-asset and portfolio manager at Janus Henderson Investors.
China maintained its currency relatively stable, limiting the yuan’s decline to about 0.4% despite total tariffs exceeding 50% on Chinese exports and the hit to Vietnam seen as closing a popular workaround route. China’s large domestic economy and hopes for support from Beijing restricted losses in Hong Kong stocks to about 1.5% and in Shanghai to around 0.5%.
“The key focus over the next few days should be China,” said Deutsche Bank strategist George Saravelos. “How willing will China be to wait for trade negotiations… or to absorb this? Or will it try to ‘export’ the shock… via a devaluation of the yuan?”
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