US stock market plunges over 5 pc as tariffs fuel recession fears; $9 trn wiped out since Trump 2.0

NEW DELHI: The US stock markets tanked more than 5 per cent on Friday after President Donald Trump’s reciprocal tariffs sparked fear among investors of a global economic recession.

The Dow Jones index closed with a decline of more than 5.50 per cent, making it one of the highest losses of the index. The S&P 500 index declined approximately 6 per cent by the closing, while Nasdaq tanked 5.73 per cent.

Ajay Bagga, banking and market expert, said, “US markets have now lost over $9 trillion in market cap since the January 20 Trump 2.0 Inauguration. US imports are $3.3 trillion. US tariff revenues, even if all imports stay and even if tariffs are collected on all these $3.3 trillion of imports, will be $600 billion. Imports will become costlier by around 20 per cent on average. Demand will go down, and import volumes will shrink. So, $600 billion will not be collected. But the market cap loss of $9 trillion is real”.

On the effect of tariffs on the US economy, a report by ASK Private Wealth noted that the move could lead to heightened economic uncertainty, potentially triggering stagflation in the US, where inflation remains high amid stagnant growth.

It said, “Impact: Higher uncertainty; chances of retaliation and rollback”. They also warned that these reciprocal tariffs could raise trade barriers to levels not seen since the 1800s.

The impact of Donald Trump’s reciprocal tariffs was felt on markets all over the globe. The United Kingdom’s FTSE 100 Index declined around 4.95 per cent by closing on Friday, while Germany’s DAX PERFORMANCE-INDEX was also down by 4.95 per cent by closing.

Indian stock indices also closed the week on a sour note, extending losses from the previous session. They were weighed down by Trump’s reciprocal tariffs and the uncertainties surrounding them.

The Sensex closed at 75,364.69 points, down 930.67 points or 1.22 per cent, while Nifty closed at 22,904.45 points, down 345.65 points or 1.49 per cent, respectively. At one point, Sensex dropped over 1,000 points, only to erase some losses before the day’s closing. IT, metal, pharma, realty, oil and gas were the top losers today, data showed.

The Sensex slumped about 2,100 points this week when the Trump administration implemented reciprocal tariffs on trading partners as part of the “Fair and Reciprocal Plan”.

Since assuming office for his second term, President Trump has reiterated his stance on tariff reciprocity, emphasising that the United States will match tariffs imposed by other countries, including India, to ensure fair trade. (ANI)