On Friday, the bottom dropped out on the global stock market. Investors seemed to panic at the increased trade tensions triggered by the new tariffs announced by U.S. President Donald Trump. Things got worse when China began retaliating against President Trump’s tariffs, deepening fears of a global recession. Since Trump unveiled sweeping 10% import taxes on goods from various nations, global markets have collectively lost trillions in value, reflecting growing concerns about the future of international trade.
The heaviest impact from the tariffs is being taken in Asia where markets have borne the brunt of shattering losses. Key trading partners, such as China, the European Union, and Vietnam, are subject to retaliation at far higher rates on a list of more than 800 products. This caused the Shanghai Composite Index to drop by more than 6%. At the same time, Hong Kong’s Hang Seng Index and Taiwan’s Weighted Index each took a major dive of almost 10%. These losses illustrate the vulnerability of Asian economies to U.S. trade policies, given the region’s reliance on exports to the U.S. market.
In the U.S., the S&P 500 index tanked about 6%. This decline represents the deepest week of loss for the stock market since 2020. Goldman Sachs was aggressive in reading the shifting economic tides. Consequently, they increased their forecast for a U.S. recession in the next 12 months to 45%. That same investment bank cut its GDP growth forecast, a sign that a strong bounce-back is in doubt and activity may slow significantly.
As the country lurches closer to the economic edge, JPMorgan has indicated a much bleaker scenario, projecting a 60% probability of U.S. and global recessions. A deep deceleration in the U.S. economy would hit Asian exporters hard, analysts caution. USDE engaged in timely work by raising the alarm about how this downturn would exacerbate already difficult conditions these markets are experiencing.
European markets have not been spared either. The UK’s FTSE 100 dropped almost 5%, its largest single day drop in five years. While those in Germany and France saw profound drops. This large, collective market drop serves as a stark reminder of the interconnectedness of global markets and how U.S. trade policies can create an adverse ripple effect.
Asia is taking the greatest hit from the U.S. tariff increase. While there could be some room for negotiation, a new regime of higher tariffs are here to stay,” said Qian Wang, Asia Pacific chief economist at investment firm Vanguard.
Anxiety over inflation and recession are rising. Julia Lee, Head from FTSE Russell, noted, “Tariffs are feeding into expectations around inflation and a recession.”