The S&P 500 experienced a notable decline of 3.3 per cent in early trading on Thursday, with the Dow Jones Industrial Average plummeting by 1,150 points and the Nasdaq composite down by 4.3 per cent. This downturn has been attributed to escalating fears regarding potential inflation and decreasing economic growth linked to newly imposed tariffs.
Global markets were affected across the board, seeing price drops not only in crude oil but also in major technology stocks and small US real estate investments. The imposition of substantial tariff increases has raised recession concerns among economists, with oil prices dropping more than 4 per cent and the US dollar hitting its lowest point against the Japanese yen since early October.
Thursday marked the fourth consecutive day of falling US markets, and analysts indicated that a recovery by the end of the day seemed unlikely. Following the closure of US markets on Wednesday, President Trump announced a baseline 10 per cent tax on imports from all countries, alongside heightened tariffs on various nations with which the US holds trade surpluses.
Specifically, imports from China are subject to a staggering 34 per cent tariff, with the European Union facing a 20 per cent tax and Taiwan bearing a 32 per cent tax on computer chip imports. As a result, Australian exports to the US, valued at nearly $40 billion, are likely to be adversely affected, though Australia will not face additional tariffs beyond the global baseline.
In Australia, the S&P/ASX 200 index dropped by 0.9 per cent to 7,859.70. Market observers noted that Trump’s tariff announcements came as a “major shock”, particularly in light of the additional burden placed on China, which now faces a total tariff of 64 per cent when previous measures are considered.
While losses were evident in Asia, expectations of further economic stimulus from Beijing provided some level of reassurance. President Trump’s goal is to utilise tariffs to create a fairer global system and stimulate the return of manufacturing jobs to the US. However, these tariffs threaten to hinder economic growth and aggravate inflation, which has remained stubbornly above the Federal Reserve’s target of 2 per cent.
US retailers have also felt the impact, with companies that previously shifted production to Vietnam now facing significant tariff repercussions. Notable brands, including Nike, Best Buy, and Dollar Tree, saw their stocks plummet over 11 per cent before the market officially opened on Thursday.
Additionally, European markets reflected this turmoil, with Germany’s DAX falling by 2.4 per cent, the CAC 40 in Paris dropping 2.7 per cent, and Britain’s FTSE 100 declining by 1.5 per cent. In Asia, Japan’s Nikkei 225 index briefly dipped by 4 per cent, ultimately closing down by 2.8 per cent.