Stock markets plunge after China retaliates against Trump tariffs

Specialist Michael Pistillo works on the floor of the New York Stock Exchange, Friday, April 4, 2025. (AP Photo/Richard Drew)

NEW YORK — Wall Street’s worst crisis since COVID slammed into a higher gear Friday.

The S&P 500 lost 6 percent after China matched President Donald Trump’s big raise in tariffs announced earlier this week. 

The move increased the stakes in a trade war that could end with a recession that hurts everyone. 

Not even a better-than-expected report on the US job market, which is usually the economic highlight of each month, was enough to stop the slide.

S&P 500 down 6 percent and Dow down 2,200

The drop closed the worst week for the S&P 500 since March 2020, when the pandemic ripped through the global economy. 

The Dow Jones Industrial Average plunged 2,231 points, or 5.5 percent and the Nasdaq composite tumbled 5.8 percent to pull more than 20 percent below its record set in December.

So far there have been few, if any, winners in financial markets from the trade war. Stocks for all but 14 of the 500 companies within the S&P 500 index fell Friday. 

The price of crude oil tumbled to its lowest level since 2021. Other basic building blocks for economic growth, such as copper, also saw prices slide on worries the trade war will weaken the global economy.

China’s response to US tariffs caused an immediate acceleration of losses in markets worldwide. 

The Commerce Ministry in Beijing said it would respond to the 34 percent tariffs imposed by the US on imports from China with its own 34 percent tariff on imports of all US products beginning April 10. 

The United States and China are the world’s two largest economies.

Markets briefly recovered some of their losses after the release of Friday morning’s US jobs report, which said employers accelerated their hiring by more last month than economists expected. 

This is the latest signal that the US job market has remained relatively solid through the start of 2025, and it’s been a linchpin keeping the US economy out of a recession.

But that jobs data was backward looking, and the fear hitting financial markets is about what’s to come.

“The world has changed, and the economic conditions have changed,” said Rick Rieder, chief investment officer of global fixed income at BlackRock.

The central question looking ahead is: Will the trade war cause a global recession? If it does, stock prices may need to come down even more than they have already. 

The S&P 500 is down 17.4 percent from its record set in February.

On Wall Street, stocks of companies that do lots of business in China fell to some of the sharpest losses.

DuPont dropped 12.7 percent after China said its regulators are launching an antitrust investigation into DuPont China group, a subsidiary of the chemical giant. 

It’s one of several measures targeting American companies and in retaliation for the US tariffs.

GE Healthcare got 12 percent of its revenue last year from the China region, and it fell 16 percent.

All told, the S&P 500 fell 322.44 points to 5,074.08. The Dow Jones Industrial Average dropped 2,231.07 to 38,314.86, and the Nasdaq composite fell 962.82 to 15,587.79.

In stock markets abroad, Germany’s DAX lost 5 percent, France’s CAC 40 dropped 4.3 percent and Japan’s Nikkei 225 fell 2.8 percent.

In the bond market, the yield on the 10-year Treasury fell to 4.01 percent from 4.06 percent late Thursday and from roughly 4.8 percent early this year. It had gone below 3.9 percent in the morning.