Trump’s Latest Tariffs Create Major Shockwaves in the Risk Market
U.S. President Trump unveiled his latest tariffs yesterday (3rd), bringing significant turmoil to the risk market. The U.S. stock market experienced a sharp decline after opening last night, with all four major indices suffering substantial losses. Furthermore, the White House released a statement indicating that the purpose of Trump’s tariffs is not intended for negotiation, exacerbating concerns about the economic outlook.
Background Summary
Gold Hits Historic Highs! Market “Funds for Risk Aversion” amidst Trump’s Global Tariff War, Escalating Oil and U.S. Treasury Volatility.
Background Information
Shock and Awe! Trump’s “Overly Aggressive” Reciprocal Tariffs, Taiwan Increases by 32%. Bitcoin Dips to $82,000, U.S. Stocks Plummet After Hours.
In the early morning hours following the close of U.S. markets, President Trump announced his latest tariff plan. According to a statement from the White House, this tariff plan includes a baseline tariff of 10% on all imported goods, with higher reciprocal tariffs imposed on specific countries, affecting over 180 countries globally, marking an unprecedented scale.
Initial estimates from economists suggest that these tariffs will directly impact approximately $2.5 trillion of U.S. imports annually, accounting for nearly 80% of total U.S. imports. Trump stated that this move aims to “rebuild the competitiveness of the U.S. economy” and achieve “fair trade” by compelling trading partners to lower their tariffs on U.S. goods.
U.S. Stocks Experience Widespread Declines
Following the announcement of Trump’s latest tariffs on the 3rd, Asian stock markets reacted first with declines, and after a day of fallout, the situation worsened for U.S. stocks last night. According to Google Finance data, after the market closed this morning, the U.S. stock market faced its largest single-day drop since 2020, with over $3 trillion in market value evaporated, resulting in significant declines across all four major indices:
- Dow Jones Industrial Average: Plummeted 3.98%, or 1,679.39 points, closing at 40,545.93 points.
- S&P 500 Index: Dropped 4.84%, or 274.45 points, closing at 5,396.52 points.
- Nasdaq Index: Fell 5.97%, or 1,050.44 points, closing at 16,550.61 points.
- Philadelphia Semiconductor Index: Crashed 9.88%, or 427.07 points, closing at 3,893.69 points.
In terms of individual stocks, large tech companies were significantly affected, with Apple dropping 9.25%, Amazon down 8.98%, and Nvidia falling 7.81%. The market was filled with lamentations.
Gold and Oil Prices See Increased Volatility
Additionally, gold prices surged due to heightened demand for safe-haven assets. As of 9 AM on April 4, August gold futures on the New York Mercantile Exchange were reported at $3,050 per ounce, marking a daily increase of 3.5%, surpassing the historical high of $3,000, reflecting market concerns over uncertainty and inflation expectations.
Oil prices, on the other hand, were impacted by potential reductions in global trade activity, with West Texas Intermediate (WTI) futures dropping to $72 per barrel, a decline of 7.7%, marking the largest single-day drop in nearly six months. Brent crude futures fell to $75 per barrel, down 6.8%.
White House Statement: Trump’s Tariffs Should Not Be Viewed as Negotiating Conditions
Why has the risk market reacted so dramatically? After Trump’s latest tariffs were announced yesterday, U.S. Treasury Secretary Mnuchin commented that the U.S. would engage in negotiations with various countries. Additionally, since these tariffs are not set to take effect immediately, it led to the perception that there might be room for reversal. However, sources cited by the Washington Post indicated that White House officials currently suggest that Trump’s tariffs should not be viewed as the starting point for negotiations but rather as a response to a national emergency, with the intention of implementing tariffs not for negotiation purposes.
At the same time, Trump stated in an interview with Reuters that if U.S. trading partners could provide something remarkable, negotiations on tariffs could take place, perhaps hinting that there might still be room for maneuver?
Related Reports
- Is There Any Chance for a Turnaround on Trump’s Tariffs? U.S. Treasury Secretary: There Will Definitely Be Negotiations; Countries Are Advised Not to Choose Retaliation.
- Trump Announces “National Emergency” Tariffs, Causing Asian Stocks to Plummet; Nikkei Index Drops 3%, South Korea Holds Emergency Meetings.
- Trump’s Tariffs Remain Unresolved; Fed’s Top Officials: Interest Rates Will Stay Unchanged “For a While”; Monitoring Inflation Risks.