Dow Plunges 1,475 Points as Trade War Fears Rattle Markets

• Apr 04, 2025

U.S. stocks took a major hit on Friday, with the Dow Jones Industrial Average dropping nearly 1,500 points by mid-morning.

The sharp selloff followed President Trump’s announcement of sweeping new tariffs on U.S. imports earlier in the week. As of 10:56 a.m. EST, the Dow had tumbled 1,475 points, or 3.6%. The S&P 500 was down 237 points, or 4.4%, while the Nasdaq Composite fell 4.6%.

Thursday's market losses were already severe, marking the biggest single-day drop since 2020. The S&P 500 and Dow both declined more than 4%, and the Nasdaq sank nearly 6%. In total, over $2 trillion in investor wealth was wiped from the S&P 500 in just one day.

Although declines of this scale are not unheard of on Wall Street, they are relatively rare. According to Adam Turnquist of LPL Financial, the S&P 500 has seen a daily drop of 4% or more only 38 times in the past 25 years.

Markets around the world also reacted negatively. In Asia, Japan’s Nikkei 225 slid 2.8% and South Korea’s Kospi fell 0.9%. European indexes followed suit, with Germany’s DAX dropping 2%, France’s CAC 40 losing 1.6%, and the UK’s FTSE 100 down 1.7%.

The escalating trade tensions are also forcing economists to lower their expectations for U.S. economic growth. With the Trump administration targeting more countries with new tariffs, analysts warn of rising inflation that could lead to weaker consumer spending — a major driver of the economy.

UBS Global Wealth Management now expects U.S. economic growth to fall below 1% this year. David Lefkowitz from UBS believes negotiations may eventually ease tariff levels, but not anytime soon.

Tariffs are typically absorbed by businesses, which then pass the added costs to consumers. This could lead to higher prices for electronics, clothing, appliances, cars, and even food products like chocolate and coffee.

Adding to investor concern, China announced it would hit back with a 34% tariff on all U.S. imports starting April 10. The country also plans tighter restrictions on rare earth exports and trade sanctions on 27 additional American companies.

“This is an aggressive, escalatory response,” analysts at Capital Economics noted, warning it further reduces chances of a quick resolution to the U.S.-China trade conflict.

One bright spot was the March jobs report, which showed the U.S. added 228,000 jobs. However, the unemployment rate edged up to 4.2%, and economists cautioned that the report doesn't yet reflect the full impact of current trade tensions.

Brian Jacobsen of Annex Wealth Management summed up investor sentiment, saying this week's market drop felt “like an operation performed without anesthesia.”