How Trump’s Tariffs Rollout Turned into Stock Market Mayhem
April 6, 2025 — President Donald Trump’s aggressive tariff rollout, unveiled on April 2 as part of his “Liberation Day” trade policy, has plunged Wall Street into chaos, triggering a brutal two-day sell-off that erased over $5 trillion from the S&P 500 and sent global markets reeling. What began as a promise to rebalance trade and boost American manufacturing has morphed into an economic and geopolitical firestorm, defying expectations and leaving investors, businesses, and consumers scrambling to adjust.
The chaos kicked off Wednesday when Trump announced a sweeping 10% baseline tariff on all U.S. imports, effective April 5, with steeper “reciprocal” duties—up to 50%—targeting 57 countries with trade surpluses, including a 34% levy on China, 20% on the European Union, and 25% on Canada and Mexico, set to begin April 9. Economists had anticipated a more measured approach, perhaps matching tariffs to those imposed on U.S. exports. Instead, the administration’s formula, tied to trade deficits rather than direct reciprocity, blindsided markets. “It’s worse than the worst-case scenario,” CNBC reported, noting the plan—finalized just hours before its Rose Garden debut—caught even Trump’s advisers off guard.
The stock market’s reaction was swift and merciless. On Thursday, the Dow Jones Industrial Average plummeted 1,679 points (4%), the S&P 500 shed 4.84%, and the Nasdaq dropped 5.97%, marking their steepest single-day declines since June 2020. Friday’s carnage was worse: the Dow fell another 2,231 points (5.2%), the S&P 500 lost 6%, and the Nasdaq entered bear market territory, down over 20% from its peak. By week’s end, the S&P 500 had shed $5 trillion in value—a record two-day wipeout—while the Dow’s 3,910-point plunge was unprecedented. The VIX, Wall Street’s “fear gauge,” spiked 39.6%, hitting a five-year high.
Global retaliation fueled the mayhem. China slapped a 34% tariff on all U.S. goods Friday, crashing its freight market to a 20-year low and prompting export curbs on rare earths. Canada and Mexico, hit with 25% duties, vowed countermeasures worth over $100 billion, while the EU mulled its own response to the 20% levy. Companies reliant on international supply chains—Apple (down 9.3%), Nike (14.4%), Best Buy (17.8%)—saw shares tank as investors priced in higher costs and shrinking demand. Even domestic firms like Dollar General bucked the trend briefly, but the broader market rout spared few.
Trump’s team doubled down. Top trade aide Peter Navarro brushed off the sell-off on CNN, predicting a “bullish boom” with the Dow hitting 50,000, while Trump, golfing at his Jupiter, Florida club Saturday, boasted on Truth Social, “THIS IS AN ECONOMIC REVOLUTION, AND WE WILL WIN.” Yet Federal Reserve Chair Jerome Powell painted a grim picture Friday, warning the tariffs would “dent growth” and “boost inflation,” dashing hopes of rate cuts to cushion the blow. Economists echoed the alarm: JPMorgan now sees a 2025 recession as likely, with tariffs hiking U.S. consumer prices by 2% and costing $660 billion annually.
The fallout exposed a miscalculation. Trump’s first-term tariffs, smaller in scope, had mixed results—some manufacturing gains, but higher consumer costs and $264 billion in duties mostly paid by Americans. This time, the scale—projected to raise $1 trillion yearly—has rattled a consumer-driven economy (68% of 2024 GDP) already facing a $1.2 trillion goods deficit. Businesses like Nissan paused Mexico production, Jaguar Land Rover halted U.S. shipments, and retailers warned of price hikes on everything from wine to iPhones. “This is the biggest policy mistake in 95 years,” Wharton’s Jeremy Siegel told CNBC, evoking Smoot-Hawley’s Depression-era legacy.
For now, the mayhem shows no signs of abating. Trump’s hints at talks—with Vietnam’s leader Friday and a vague nod to China via TikTok—offer little clarity, as White House signals oscillate between defiance and negotiation. Investors, burned by the whiplash, are fleeing to bonds and gold, while the world braces for a trade war that could redefine the global economy—or sink it. As one X user quipped, “Tariff man’s back, and he brought the apocalypse.” Whether this is a revolution or a reckoning, Wall Street’s verdict is clear: chaos reigns.
