Global Stock Markets Plunge as US-China Tariff War Escalates: What It Means for the Economy

Hadisur Rahman, Jadetimes Staff

H. Rahman is a Jadetimes news reporter covering Business

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Image Source: Getty Image

The global stock market faced a major meltdown on Friday following China’s retaliation to sweeping tariffs imposed by US President Donald Trump. With no signs of resolution in sight, this tit-for-tat has amplified fears of a prolonged trade war and a potential global recession.

All three major US indexes—Dow Jones, Nasdaq, and S&P 500—experienced significant losses, each plunging over 5%, with the S&P 500 alone tumbling nearly 6%. This marked the worst week for US markets since 2020, during the initial shock of the COVID-19 pandemic.

International Markets Also Hit Hard

• UK’s FTSE 100: Dropped 4.9%, its steepest decline in five years.

• France's CAC 40 and Germany's DAX: Fell by 4.3% and nearly 5%, respectively.

• Asia’s Markets: Followed the global trend with significant losses, including a 2.7% fall in Japan’s Nikkei 225.

• Brent Crude Oil: Sank almost 6%, reflecting broader market unease.

What Triggered This Stock Market Collapse?

President Trump imposed new 10% tariffs on imported goods from all countries, significantly impacting nations like China, the EU, and Vietnam. China responded with a sharp counterstrike—34% import taxes on US goods, reduced mineral exports, and placed American firms on a blacklist.

Describing Trump’s actions as “bullying,” China’s strong stance only deepened the standoff. Trump, however, downplayed the situation, calling the US labor market strong and urging Americans to “hang tough.”

Tariffs and Economic Forecasts: What Are Experts Saying?

According to JP Morgan, the likelihood of a global recession has now risen to 60%, up from 40%, largely due to the anticipated contraction in international trade. The tariffs are being dubbed as the largest tax increase in the US since 1968.

Economists warn of price hikes, slower economic growth, and job losses if the trade war continues. The Federal Reserve Chair Jerome Powell stated that although the US economy remains "solid," the uncertainty surrounding tariffs is higher than forecasted, with real consequences on growth and inflation.

Impact on Businesses: From Tech Giants to Local Shops

• Apple shares plummeted by over 7% in a single day, losing around 15% of its value since Wednesday.

• Nike and other fashion retailers initially dropped but recovered slightly after Trump’s “productive” talks with Vietnam.

• In New Jersey, small business owner Pat Muscaritolo fears he may have to close his appliance store after 40 years due to soaring prices.

“We don’t know what the price is going to be at the end of the month,” he said, worried about a 30-40% increase in essential goods like refrigerators.

Some Optimism Amid Chaos

Interestingly, housing-related firms showed resilience, buoyed by speculation that interest rates may be lowered in response to economic turbulence. This could spur housing market activity in the US.

International Reactions: Hopes for Dialogue Still Alive

• The European Union’s trade commissioner, Maroš Šefčovič, signaled willingness to negotiate but warned that the EU would defend its interests.

• Cambodia offered to cut its own tariffs, inviting the US for dialogue.

• In the Falkland Islands, where fishing dominates the economy, exporters are anxiously watching how a 42% tax on fish exports to the US will affect sales.

Final Thoughts: Where Is This All Heading?

This is what we get to know from this article—we are facing a pivotal moment in global trade dynamics. The Trump administration’s aggressive tariff policy has already triggered market panic and could lead to severe long-term repercussions if not addressed through diplomatic channels.

With small businesses at risk, global alliances under strain, and key industries in turmoil, the world waits to see whether this trade conflict will cool down or spiral further. For now, investors, businesses, and consumers alike are bracing for impact.