Global Stocks Plunge as Trump Tariffs Ignites Trade War Fears

Global Stocks plunged after US President Donald Trump announced tariffs on Chinese goods, igniting fears of a global trade war.

Even though the import tariffs had been out for weeks, Thursday’s news sent investors rushing for havens. Bonds and gold prices rose, and the Japanese yen hit its highest level against the US dollar since Trump won the election.

“Yes, the news was out for a while, but the actual action was a bit of a surprise to the market,” said Shinchiro Kadota, senior forex and rates strategist at Barclays. “Maybe they thought it would be smaller, maybe later.”

The Stoxx Europe 600 index fell 1.55% to finish at 369.15, hitting its lowest close since March 2, according to FactSet data.

Germany’s exporter- and industrials-heavy Dax 30 slid 1.7% to end at 12,100.08. The CAC 40 index lost 1.38% to close at 5,167.21. The UK’s FTSE 100 index shed 1.23% to finish at 6,952.59.

In Asia, MSCI broadest index of Asia-Pacific shares outside Japan dropped 2.2% as stocks across the region fell.

Japan’s Nikkei 225 Index dropped 4.51% to close at 20,617.86. The Japanese yen’s sharp gains on Thursday also pressured global stocks lower. The yen advanced further on Friday, recording 16-months highs as the dollar went below 105 yen.

In China, the Shanghai Composite Index was down 3.39% to 3,134.95, and the Shenzhen Composite Index plunged 4.49% to 1,757.03.

Hong Kong’s Hang Seng Index lost 3.09% to 30,080.51 as index heavyweight Tencent added to Thursday’s 5% post-earnings fall with a 4.3% decline. The drop for the Chinese internet giant, Asia’s biggest company by market value, came as major shareholder Naspers said it would sell a portion of its 1/3 stake in the company.

Further, Hong Kong-listed and pork producer WH Group declined 5.49% at 8.90. It owns US-based Smithfield, and the new tariffs will affect its imports of US pork into China.

Seoul’s benchmark Kospi index declined 3.18% to finish at 2,416.76, as technology companies dropped sharply. Heavyweight Samsung Electronics slid 2.63%.

In Sydney, the S&P/ASX 200 slumped 1.96% to finish at 5,820.7. Declines were led by the materials sub-index, and oil producers were weaker.

The Dow Jones industrial average lost more than 700 points, or 2.93%, to close at 23.957.89. It was the worst decline since February 8. In addition, Caterpillar, 3M, and Boeing were the worst performers.

The S&P 500 dropped 2.5% to 2,643.69, with 7 of 11 sectors, including tech and financials, losing more than 2%. The Nasdaq composite bounced back 2.3% to end at 7,166.68.

China Responds to Trump Tariffs

The losses came after President Donald Trump on Thursday directed the US trade representative to level tariffs on about $50 billion worth of Chinese imports following a 7-month investigation into intellectual property theft, according to CNN.

China responded within hours of the White House decision. The country’s commerce ministry announced that the trade sanctions would target $3 billion worth of US goods. These include pork, apples, and steel pipe with higher duties.

“China does not want a trade war, but China is not afraid of a trade war,” the statement said. “We are confident in our capability to face up to any challenge.”

The 2 biggest economies said they would pursue legal action against one other at the World Trade Organization.

“China hopes the United States will pull back from the brink, make prudent decisions, and avoid dragging bilateral trade relations to a dangerous place.”