Dow Drops 1,200 Points, Markets Swing Wildly As Trump Defends Tariffs Amid Recession Fears

<p>Global financial markets witnessed a steep sell-off on Monday following US President Donald Trump&rsquo;s announcement of sweeping tariffs, fuelling fears of a worldwide economic slowdown. Wall Street mirrored the global trend, with the Dow Jones Industrial Average plunging by 1,200 points and the Nasdaq composite declining by 4 per cent, according to the Associated Press. The S&amp;P 500 dropped 3.8 per cent in early trading, marking its worst performance since the COVID-19 pandemic began in March 2020.</p>
<p>According to AP, the Dow Jones Industrial Average quickly reversed a 1,700-point morning loss, surged more than 800 points, and then dropped 629 points again.</p>
<p>The S&amp;P 500 was down 0.7% in the first hour of trade and also experienced abrupt up-and-down lurching moves. The composite Nasdaq was up 0.2%. That came after steep declines globally as concerns grow over whether Trump’s trade war will destroy the world economy.</p>
<p>Since April 2, markets have been inching towards bear territory. In the two days following the tariff announcement, over $5 trillion in value was wiped off US stocks. Japan&rsquo;s Nikkei index fell nearly 8 per cent, while European stocks tumbled by 6 per cent. The VIX volatility index also recorded its highest level since August 2024.</p>
<p>US President Donald Trump declared that there is &ldquo;NO INFLATION&rdquo; even as global markets tumbled.&nbsp;On the social platform Truth, Trump remarked, &ldquo;Oil prices are down, interest rates are down (the slow‑moving Fed should cut rates!), food prices are down, there is NO INFLATION, and the long‑time abused USA is bringing in Billions of Dollars a week from the abusing countries on Tariffs that are already in place.&rdquo;&nbsp;</p>
<p>”This is despite the fact that the biggest abuser of them all, China, whose markets are crashing, just raised its Tariffs by 34%, on top of its long-term ridiculously high Tariffs (Plus!), not acknowledging my warning for abusing countries not to retaliate. They&rsquo;ve made enough, for decades, taking advantage of the Good OL&rsquo; USA! Our past &ldquo;leaders&rdquo; are to blame for allowing this, and so much else, to happen to our Country. MAKE AMERICA GREAT AGAIN!,” he asserted.</p>
<p>According to news agency Reuters, investors fear that the US Federal Reserve may be compelled to reduce interest rates as early as May, citing rising risks of a recession.</p>
<p>JPMorgan Chase CEO Jamie Dimon warned that the Trump administration&rsquo;s trade policies are likely to drive up prices for both imported and domestic goods and services, adding strain to an already slowing US economy, AP reported.</p>
<p>Meanwhile, European Commission President Ursula von der Leyen stated that the European Union is diversifying its trade engagements in response to US tariffs. &ldquo;We will focus like a laser beam on the 83% of global trade that is beyond the United States. Vast opportunities,&rdquo; she said on Monday, as quoted by AP. After concluding trade deals with Mexico and Switzerland, von der Leyen added, &ldquo;we&rsquo;re working on India, Thailand, Malaysia, Indonesia and many others.&rdquo;</p>
<p>She also revealed that the EU is establishing a taskforce to monitor dumping activities and any abrupt surges in imports that may result from changing trade dynamics. &ldquo;The taskforce will help protect ourselves against indirect effects through trade diversion,&rdquo; von der Leyen noted.</p>
<p>While the European Commission still seeks a trade agreement with the US, von der Leyen affirmed, &ldquo;We are preparing a potential list for retaliation, and other measures for retaliation, if this is necessary.&rdquo; The Commission is responsible for negotiating trade deals and disputes on behalf of the 27 EU member states.</p>
<h3><strong>Hong Kong Sees Worst Crash Since 1997</strong></h3>
<p>In Asia, the Hong Kong stock market suffered its worst single-day fall since 1997, plummeting 13.2 per cent. Japan&rsquo;s Nikkei also dropped nearly 8 per cent.</p>
<p>Across Europe, Germany&rsquo;s DAX index momentarily dipped over 10 per cent before recovering slightly to a 5.8 per cent loss in morning trade. France&rsquo;s CAC 40 fell 5.8 per cent and Britain&rsquo;s FTSE 100 dropped 4.9 per cent.</p>
<p>European equities, which had started 2025 on a strong note, have seen their gains wiped out after just three sessions of heavy selling, reported Reuters. Executives are now recalculating the potential fallout of the US tariffs on global supply chains, which could jeopardise earlier financial forecasts.</p>
<p>&ldquo;The higher than expected tariff rates &hellip; were not factored into many investors&rsquo; or companies&rsquo; calculations,&rdquo; said Magesh Kumar Chandrasekaran, an equity strategist at Barclays, as quoted by Reuters. He cautioned that if the situation continues, it could lead to lower economic growth and diminished corporate profits.</p>
<p>Chandrasekaran added that while some sectors are more vulnerable than others, providing updated financial guidance may be difficult under such uncertain conditions. &ldquo;The question is will there be enough time for them to actually get those numbers in in time? Because we don&rsquo;t know what the retaliation measures are going to be from some of the European partners &hellip; or even from other countries, in that sort of scenario exact numbers might be lacking in some cases,&rdquo; he remarked.</p>