Stock markets around the world tumbled on Thursday, the dollar sank and oil prices plunged after Donald Trump’s new global tariffs raised fears of a US recession.
Wall Street experienced its worst day since the pandemic in 2020, with a sell-off in equities wiping more than $2 trillion off America’s most valuable companies in the aftermath of what the US president called “liberation day”.
Mr Trump announced minimum tariffs of 10pc on all imports from around the world, with additional levies on dozens of other countries reaching as high as 50pc. The president argued the tariffs would help make the US rich.
However, rating agency Fitch said the trade policies were “significantly raising US recession risks.” World leaders signalled they would respond to Mr Trump’s tariffs with levies of their own, suggesting a global trade war that would leave the world poorer.
The US dollar fell by 1.7pc against a basket of currencies, adding to speculation that its days as a safe-haven currency could be numbered. Recession fears also drove down the oil price by 6.7pc, amid concerns that a slowdown in the world’s largest economy would dampen demand.
Mr Trump insisted the US economy was “healing” after his drastic action. He said on Truth Social: “The operation is over! The patient lived and is healing. The prognosis is that the patient will be far stronger, bigger, better and more resilient than ever before.”
Speaking to reporters at the White House, Mr Trump said: “I think it’s going very well.”
“The markets are going to boom,” he said, adding: “The country is going to boom.”
Vice President JD Vance also insisted during a Fox News interview that there was nothing but “enthusiasm” for Mr Trump’s aggressive trade policies.
There was little enthusiasm on show on Wall Street, where the the S&P 500 fell 4.8pc. The tech-heavy Nasdaq index, home to giants like Apple, Nvidia and Microsoft, lost 6pc.
Apple lost more than $250bn in market value after shares in the iPhone-maker fell by more than 9pc, the worst day since the start of the pandemic.
American banks were also swept up in the sell-off despite not being directly exposed to tariffs, with Citigroup down 12pc and Bank of America 11pc.
Mr Trump has now presided over the worst 10-week start to a presidency as measured by stock market performance since George Bush and the dot-com crisis in 2001.
The rout hit stocks from Tokyo to London, as affronted American trade partners vowed to fight back.
However, in another sign of a Brexit dividend, the sell-off in London was only half as bad as similar slumps in Europe. The FTSE 100 suffered a 1.6pc fall. The German Dax was down 3pc and French stocks on the Cac 40 fell 3.3pc.
The differing scale of the slumps reflects the difference in tariffs. President Trump hit the EU with levies of 20pc on all goods sold to the US, but put a 10pc levy on British imports.
Emmanuel Macron branded the move “brutal and unfounded”, while Italy’s Giorgia Meloni said it was “wrong” and EU chief Ursula von der Leyen warned she was “prepared to respond”.
Economists and traders warned that the tariffs would lead to lower global growth and push America’s economy into recession.
The world economy will be 2pc smaller than it otherwise would be by 2027 as a result of the tariffs, The National Institute of Economic and Social Research said.
Libby Cantrill from US bond giant Pimco, which manages $2 trillion of assets, said: “Anyone who may have doubted Trump’s seriousness about rebalancing the economy through tariffs and his deeply held belief that tariffs work, should be convinced by now.
“We should expect to see economic damage both in terms of a drag on growth, maybe even tipping into recession, and upward pressure on inflation.”
Luca Paolini from Pictet Asset Management said: “We now rate the probability of a US recession at 50pc or higher — significantly more than we anticipated just a few months ago. Given the heightened risk of a US recession, we believe it is prudent to reduce risk.”
British stocks could emerge in a relatively stronger position than many rivals, Mr Paolini added.
He said: “The UK, for its part, will be subject to a more modest tariff of 10pc. This and the fact that its equity market offers high dividend yields and relatively high exposure to commodities and defensive sectors, indicate UK stocks could fare better than most.”
Credit: The Telegragh
