U.S. financial markets plunged into deeper turmoil Monday after former President Donald Trump threatened to impose an additional 50% tariff on Chinese imports, signaling an aggressive escalation in the global trade war that rattled Wall Street and drew warnings from economists and business leaders about a looming recession.
"If China does not withdraw its 34% increase above their already long term trading abuses by tomorrow, April 8th, 2025, the United States will impose ADDITIONAL Tariffs on China of 50%, effective April 9th," Trump posted on Truth Social. "Additionally, all talks with China concerning their requested meetings with us will be terminated!"
The potential new levy would bring the total U.S. tariffs on Chinese goods to 104% when combined with Trump's previously announced 20% tariff related to fentanyl trafficking and the 34% hike last week. The threat immediately triggered a panic in the markets.
- The Dow Jones Industrial Average fell 840 points, or 2.2%
The S&P 500 dropped 1.7%
The Nasdaq Composite declined 1.5%
Earlier in the session, the Dow had surged nearly 900 points on a false rumor that the White House might pause the tariffs. Once denied, the market reversed sharply. "That was a monster move off the low," said Joe Saluzzi, partner at Themis Trading.
The White House later declared the speculation "fake news." Trump reaffirmed his hardline stance, stating: "Sometimes you have to take medicine to fix something." He added on Truth Social, "Be Strong, Courageous, and Patient, and GREATNESS will be the result!"
The market's wild swings reflected how desperate investors are for clarity. "That was a good example of what would happen if we actually got some rational thought mixed in with the ignorant tariff policy," Art Hogan, chief market strategist at B. Riley Wealth Management, told CNN.
Goldman Sachs said the risk of a recession is rising-even if the tariffs are walked back-due to "a sharp tightening in financial conditions, foreign consumer boycotts, and a continued spike in policy uncertainty." JPMorgan Chase CEO Jamie Dimon echoed similar concerns, warning shareholders that tariffs would drive prices higher and curtail growth.
The Federal Reserve has yet to signal a policy shift but is under mounting pressure. Fed Chair Jerome Powell noted Friday that "there's a lot of waiting and seeing going on, including by us." Markets now expect the central bank to cut rates at least four times this year, according to CME's FedWatch tool.
International reaction was swift. European Commission President Ursula von der Leyen said the EU is open to negotiating with the U.S. and has offered to eliminate tariffs on industrial goods. There are "vast opportunities," she said. At the same time, Brussels is preparing retaliatory tariffs.
In Asia, Japanese Prime Minister Shigeru Ishiba voiced strong opposition. "I'm strongly concerned" the tariffs would deter Japanese investment, he said, calling the situation a "national crisis."
Trump, speaking aboard Air Force One on Sunday, was defiant. "It's good to win," he said of his weekend golf tournament at Mar-a-Lago. Asked whether the economic backlash would change his approach, he added, "They have treated the U.S. very poorly on Trade... It all has to change, but especially with CHINA!!!"
Commerce Secretary Howard Lutnick told CBS's "Face the Nation" that the president was not bluffing. "The tariffs are coming. (Trump) announced it, and he wasn't kidding," Lutnick said.
Elon Musk, CEO of Tesla and a White House adviser, publicly questioned the trade approach during a video call with Italian officials. "I hope it is agreed that both Europe and the United States should move ideally... to a zero tariff situation," he said.
White House trade adviser Peter Navarro dismissed Musk's criticism. "He sells cars," Navarro said on Fox News. "That's what he does. He's simply protecting his own interests."
Monday's trading saw the S&P 500 swing 8.5% within 34 minutes-from its daily low at 9:43 a.m. ET to its peak at 10:17 a.m.-before slumping again. That level of volatility has not been seen since the COVID-19 crisis, as measured by the Cboe Volatility Index, or VIX, which surged to its highest level in years.
"The fact that stocks have dropped so significantly in these deep intraday moves is a clear sign of indiscriminate and fear-based selling," said James Demmert, chief investment officer at Main Street Research. "We are getting close to a bottom."
Meanwhile, billionaire hedge fund manager Bill Ackman criticized Commerce Secretary Lutnick, accusing him of being "indifferent to the stock market and the economy crashing." Though Ackman later apologized, he stood by his critique of the tariffs. "I am just frustrated watching what I believe to be a major policy error occur," he posted on X.
