The US stock market fell another 5.5-6% after China announced 34% tariffs in response

After the US declared a trade war against 185 countries, the stock market lost $6.6 trillion on April 3-4, the biggest two-day crash in history. Since January, when Trump took office for a second term, the market has lost $11.1 trillion.

On Friday, the Dow Jones index fell another 5.5% (9.5% in two days) to a 9-month low, the S&P 500 index fell 5.97% (10.9%), and the Nasdaq Composite fell 5.82% (11.8%) to an 11-month low.

China and the EU's retaliatory tariffs have stunned traders with the extent to which the situation will primarily affect the US economy. Analysts have already called the tariff situation a "tariff economic Armageddon" and Wall Street's VIX "Fear Index" jumped to an 8-month high amid a sell-off in stocks.

In addition to the existing tariffs, China is imposing a 34% tariff on all products imported from the United States starting April 10 in response to Trump's policy. In 2024, trade turnover between the United States and China amounted to $688.28 billion, with the United States exporting goods to China worth $163.62 billion, or three times less than it imported from China.

The STOXX 50 index fell 2.9% on Friday, while the broader STOXX 600 index fell 2.5%, hitting its lowest level since mid-January. For the week, the STOXX 50 fell 6.7%, while the STOXX 600 fell nearly 5.9%, the biggest weekly drop in the European market since March 2022.

According to CNN, after the tariffs were imposed, Trump began actively communicating with leaders of many countries about retaliatory tariffs, and has already agreed with Vietnam, India and Israel on possible tariff reductions. Argentina also said it is in the final stages of negotiations with the US to become the first country with zero tariffs.

Over the weekend, more than 1,200 protests took place in the United States, in which millions of people dissatisfied with the policies of the Trump Administration took part. At the same time, US Treasury Secretary Scott Bessant said in an interview with blogger Tucker Carlson that the fall in the US stock market is more related to the recent emergence of the Chinese AI assistant DeepSeek than to the policies of President Donald Trump, and it is quite difficult to comment on such statements by officials of this level.

Trump said that Elon Musk is returning to his business and will no longer lead the DOGE government department, which was supposed to deal with reducing US government spending. Musk himself “unexpectedly” stated the need to create a free trade zone between the US and Europe with zero tariffs, which is likely due to the drop in Tesla sales in EU countries by 15-75% in the first quarter after Musk's scandalous statements and condescension.

This week, markets will expect Trump's response to the protests and the lifting of some tariffs for some countries, which will calm stock markets a bit, but will increase pressure on commodity markets, which will try to rebuild trade chains in accordance with the new tariffs, as many companies have already announced the suspension of goods supplies to the US until the tariff rates are determined.