Stocks and US Dollar plunge amid Trump’s worldwide tariffs

US markets slid Thursday in their steepest decline in more than two years, as investors grappled with the threat that President Trump’s new tariff plan will trigger global retaliation and hurt economic growth.

While tariffs have been a topic that Americans give Trump lower approvals, the President is sticking with his vow to tariff countries that he says take advantage of and tariff the US.

The Dow industrials dropped about 1400 points and the tech-heavy Nasdaq, which powered the market higher for years, was down 5.5%, led by big declines in Nvidia, Apple and Amazon.com.

Major stock indexes dropped as much as 5.5%. Stocks have lost roughly $2.7 trillion in market value Thursday, on track for their largest decline since March 2020. The dollar slipped to its lowest level of the year, a sign of unease over fears that the flow of international funds into the country will be sharply curtailed. 

Inflation expectations also rose. rench President Emmanuel Macron said Europe is weighing retaliation against U.S. tech firms, while Candadian Prime Minister Mark Carney said his country will match President Trump’s auto tariffs with 25% tariffs of its own.

China has said it will take resolute measures in response. A Commerce Ministry statement Thursday said the tariffs “violate international trade rules, severely infringe the legitimate rights of relevant parties and represent a typical act of unilateral bullying.”

The tariffs are pegged to the amount that Trump says other countries impose on the US. Canada and Mexico are exempt from the reciprocal tariff regime, but are still subject to plans to impose 25% tariffs on most imports to the US, though the administration has given an exemption for autos and many other goods. 

While it is likely that markets will be rattled, there is no guarantee that they will be in free fall. Despite the 2025 retreat in major indexes, investors have remained generally sanguine this year about the prospects for global growth and the opportunities for U.S. markets. But the tariffs and the international reaction will test that faith.

Much of how global stocks and the US Dollar react longterm will be determined by the chain reaction of how other countries react to Trump’s tariffs, and how Mr Trump responds to their reactions.