US stock market collapses due to tariffs - Economist

Trade War between America and China flares up

US stock market collapses due to tariffs

US stocks fell sharply on Friday amid a massive sell-off after China retaliated by imposing new tariffs on US goods, raising fears that a trade war would push the world into recession.

As the trade war escalated and recession fears intensified, the fear index jumped more than 50%, recording its highest daily close since the height of the COVID-19 pandemic.

US stock markets suffered billions of dollars in losses at the end of trading this week, following US President Donald Trump's imposition of tariffs on Wednesday, which rattled the global economy.

Following comments by US Federal Reserve Chairman Jerome Powell about the risks of rising inflation due to tariffs, US stock indices continued their losses, weighed down by lingering concerns about the repercussions of the "reciprocal tariffs."

The Dow Jones Industrial Average entered correction territory after falling 2,063 points, or 5.1%, on Friday, its largest drop since June 2020 during the pandemic. This follows a 1,679-point drop on Thursday, which brought the decline from a record high of 14%.

The Standard & Poor's 500 Index fell 5.6%, also its biggest drop since June 2020. The benchmark index lost 4.84% on Thursday and is now 17% below its recent high.

The Nasdaq Composite Index, which includes many technology companies that sell to and manufacture in China, also lost 5.4%. This follows a decline of about 6% on Thursday. This index is 22% below its December record high, which is what Wall Street termed a "bear market."