Market Suffers Steepest Decline Since Early Pandemic Days
U.S. stock markets have endured their most significant losses since the onset of the COVID-19 pandemic, triggered by President Donald Trump’s announcement of sweeping tariffs. In a dramatic two-day downturn following Wednesday’s policy reveal, the Dow Jones Industrial Average fell by 9.2%, the S&P 500 declined 10.5%, and the tech-heavy Nasdaq plummeted by a staggering 11.4%.
These losses have effectively erased nearly a full year of gains for the markets, signaling growing investor anxiety over the potential economic impact of escalating trade tensions.
Positive Jobs Report Fails to Offset Market Anxiety
Although Friday’s U.S. jobs report provided a glimmer of positive news—228,000 new jobs added and an unemployment rate edging slightly higher to 4.2%—investors remained focused on the brewing trade conflict. The optimism was further dampened by China’s announcement of retaliatory tariffs, which included a 34% levy on a variety of U.S. goods. This response heightened fears of a prolonged trade war with substantial economic repercussions.
Bill Adams, Chief Economist at Comerica Bank, reflected on the situation bluntly: “The (jobs report) provides little comfort with the stock market puking out the last year’s gains in the last two days.”
Tariff Fears Drive Comparisons to Great Depression-Era Policy
The current selloff has drawn comparisons to the early pandemic crash, when the S&P 500 dropped 28.5% in just 13 trading days. While the 2020 market swiftly rebounded with government stimulus and Federal Reserve support, similar measures have yet to be proposed in response to the current trade-related slump.
Oxford Economics has raised concerns about the long-term effects of the tariffs, estimating that the U.S. average tariff rate could climb to 24%—higher than during the Great Depression. They anticipate inflation rising to 4.5% and economic growth slowing from 2% to just 1.3% due to the tariffs’ drag on consumer prices and corporate profits.
From Market Optimism to Growing Uncertainty
This latest downturn marks a sharp reversal from the initial investor optimism following Trump’s election. The S&P 500 saw a 4.5% increase as markets anticipated business-friendly deregulation. However, since Trump began outlining aggressive tariff policies against key trade partners like Canada and Mexico, the index has fallen 17.4% from its February peak of 6144.
As market volatility continues, investors are left grappling with uncertainty over the future of global trade and its implications for economic stability in the U.S.