Global stocks suffer Trump tariff wipeout with trillions written off
US president Donald Trump appears on a television screen at the stock market in Frankfurt, Germany on Thursday. Picture: Michael Probst/AP
Global financial markets plunged into turmoil on Thursday as US president Donald Trump’s escalating trade war knocked trillions off the value of the world’s biggest companies, heightening fears of a US and possible global recession.
Roughly $2.5tn (€2.27tn) was erased from the S&P 500 Index of US shares.
The damage was heaviest in companies whose supply chains are most dependent on overseas manufacturing.
Apple, which makes the majority of its US-sold devices in China, fell 9.3%.
Lululemon and Nike, among the companies with manufacturing ties to Vietnam, were both down more than 9%. Few stocks in the US were unscathed as the benchmark notched its biggest decline since June 2020.
More than 80% of companies in the S&P 500 dropped, with more than two thirds sliding at least 2%.
While Mr Trump timed his Wednesday evening Rose Garden address to avoid live tickers of crashing stock markets, that fate arrived when Asian exchanges opened hours later.
Drawing comparisons with the market crashes at the height of the covid pandemic and the 2008 financial collapse, the sell-off swept the globe — sending exchanges plunging in Asia and Europe.
The breadth and severity of the levies dwarfed those imposed by Mr Trump during his first term, threatening to upend global supply chains, exacerbate an economic slowdown, and boost inflation.
It also left investors struggling to game out what levies would do to corporate profits.
In Dublin, the Iseq index of Irish shares fell 1.82%, led by a sharp drop in AIB’s share price by 4.18%, with Bank of Ireland dropping 4.08, and Ryanair down 3.6%.
Britain’s Ftse 100 Index of blue-chip companies closed the day down 133 points, or 1.5%, to 8,474 after suffering its worst day since August.
European stocks suffered their worst day in eight months as investors reacted to the 20% tariff rate for the EU.
The Stoxx Europe 600 Index sank 2.6% at the close.
The major regional stock exchanges were all in the red, with France’s Cac 40 down 3.3%, Germany’s Dax slipping 3% and Denmark’s OMXC25 index dropping 2.4% into a bear market.
European banks — which led the rally this year — were among the hardest-hit sectors, falling 5.5%.
Carmakers were also affected, extending their year-to-date losses to 7.2%, after Mr Trump’s tariffs on US auto imports took effect shortly after midnight in Washington DC.
France and Germany are pushing for a more aggressive tariff response that could strengthen the EU’s negotiating position.
The dramatic escalation in Mr Trump’s global trade war threatens to wipe out much of the eurozone expansion that the European Central Bank forecasts for this year and next.
Tariff concerns have replaced the positive mood that had boosted European stocks this year on hopes of increased government spending in Germany, lower interest rates, and cheaper valuations.
The Stoxx Europe 600 Index had outpaced the S&P 500 by a record of almost 15 percentage points in dollar terms in the first quarter.
The correlation between stocks and bond yields is now at the highest level in two years.
Unlike in 2023, this time they are falling in concert — a sign that economic growth expectations are being downgraded.
- The Guardian and Bloomberg
