Stock futures plunged ahead of open Thursday as President Donald Trump’s sweeping global tariffs were worse than expected, spooking markets and threatening a full-blown trade war.
Trump announced a 10% baseline tariff on imports from most countries, while also unveiling harsher reciprocal levies on certain nations–including a 34% tariff on China, an additional 20% rate on goods from the European Union, and 24% on those from Japan. Some Asian countries had it even worse, with a 46% levy on Vietnam and 49% on imports from Cambodia. Canada and Mexico were exempt from fresh tariffs as they are already subject to levies.
Futures on the S&P 500 tumbled 2.9%, while Dow Jones Industrial Average futures fell 2.4%, or more than 1,000 points. But the tech-heavy Nasdaq 100 was the worst hit, as futures plummeted 3.2%. All three major indexes closed higher Wednesday as the investors began to hope the Rose Garden announcement would be better than feared.
Oh, how wrong they were.
“The tariffs put in place last night were extraordinary both in terms of scale and in how they were calculated,” Deutsche Bank strategist Jim Reid wrote Thursday. “Our U.S. economists estimate that the average tariff rate on U.S. imports could now rise into the 25%-30% range, a level clearly on the worst end of expectations,” he added.
The announcement has ramped up recession fears, particularly if the new levies prove to be durable. “The risk of a U.S. and global recession has increased, as has the likelihood that inflation stays higher for longer, Daniel Murray, head of research at private banking group EFG said.
One silver lining may be that the reciprocal tariffs won’t go into effect until Wednesday April 9. That gives countries some time–albeit not much–to negotiate with the Trump administration.
It seems there is scope for striking deals. Treasury Secretary Scott Bessent said the tariffs will be a ceiling, not a floor, The Wall Street Journal reported. However, he also urged countries not to retaliate.
“A carrot has been dangled, but if countries opt for the stick, retaliation could mean things get worse before they get better,” Hargreaves Lansdown analyst Matt Britzman said.