Global financial markets are grappling with heightened volatility as President Donald Trump’s aggressive tariff policies stoke fears of an economic slowdown.
On Monday, March 10, 2025, the U.S. S&P 500 plummeted 2.7%, erasing all gains since Trump’s November election victory, while the Dow Jones Industrial Average slid 2% and the tech-heavy Nasdaq cratered 4%, wiping out $1 trillion in value.
The sell-off, triggered by Trump’s weekend remarks acknowledging a period of transition for the U.S. economy, continued into Tuesday, with the S&P 500 dipping another 0.3% at the open, bringing its year-to-date loss to 5%.
Investors are increasingly rattled by the prospect of tariffs on China, Canada, and Mexico introduced to curb illegal drugs and migration driving up prices and denting growth in the U.S. economy.
Tech Stocks Bear the Brunt
The tech sector has been hit hardest, with Tesla shares plunging 15.4% amid declining orders in Europe and China, compounded by competition from Chinese electric vehicle makers and concerns over Elon Musk’s political alignment with Trump impacting the brand.
AI chip giant Nvidia dropped over 5%, while Meta, Amazon, and Alphabet also saw sharp declines. Analysts attribute this to profit-taking on overvalued tech stocks and broader fears of an economic slowdown.
Ruth Foxe-Blader of Foxe Capital noted how Trump’s unpredictable tariff strategy has unsettled investors once buoyed by his promises of deregulation and tax cuts.
Global Ripple Effects and European Resilience
The turbulence rippled across Asia, with Japan’s Nikkei 225 closing down 0.6% and South Korea’s Kospi falling 1.3% on Tuesday, though both recovered from steeper early losses. The U.S. dollar weakened further against the pound and euro, extending its slide since early March.
In contrast, European markets showed resilience, with Germany’s Dax rising 0.4%, France’s Cac 40 up 0.2%, and the UK’s FTSE 100 dipping just 0.1%. This stability suggests Europe may be less exposed to Trump’s trade policies, though analysts warn prolonged uncertainty could still spill over.
Trump’s Shifting Narrative on Markets
In a Fox News interview on Sunday, Trump downplayed market swings, saying, “You can’t really watch the stock market,” and contrasting America’s short-term focus with China’s 100-year perspective.
In his first term, the S&P 500 surged nearly 70%, and he promised that the stock market is going to be great in his second term. White House spokesman Kush Desai also doubled down, citing trillions in investment commitments from industry leaders. Despite all these, the latest tariffs show fading business confidence.
Tariffs: Boom or Bust?
Trump remains defiant, telling reporters Sunday that tariffs will “make our country rich again.” Economic adviser Kevin Hassett echoed this on CNBC, arguing they’re already bringing manufacturing and jobs back, dismissing current “blips” as a “Biden inheritance.” Yet, economist Mohamed El-Erian counters that investors, initially optimistic about deregulation, underestimated trade war risks.
As uncertainty leads businesses and households to cut back on spending, economic growth may falter, unlike the post-election ‘Trump effect’ that boosted small-business confidence in the U.S. economy. Investors are watching to see if Trump will stick to his plan or pivot, potentially lifting markets again.
