Nikkei Plunges 5.6% Amid Trump Trade Jitters

10 Apr at 9:32 pm

2730 posts

Nikkei Plunges 5.6% Amid Trump Trade Jitters \ Newslooks \ Washington DC \ Mary Sidiqi \ Evening Edition \ Asian stock markets fell sharply Friday following a major pullback on Wall Street. The Nikkei 225 dropped 5.6% amid renewed fears over President Trump’s trade war with China. U.S. markets reeled after the White House clarified tariffs on Chinese imports would reach 145%.

Quick Looks

Japan’s Nikkei 225 sank 5.6% early Friday.
South Korea and Australia also saw losses at the open.
The downturn follows a steep drop in U.S. markets Thursday.
S&P 500 fell 3.5%, trimming Wednesday’s 9.5% surge.
Dow Jones dropped 1,014 points; Nasdaq fell 4.3%.
China announced new counter-tariffs on U.S. imports.
White House confirmed 145% total tariffs on Chinese goods.
The S&P 500’s losses briefly surpassed 6% Thursday.
Market optimism from Trump’s tariff pause was short-lived.
Investor anxiety rises as U.S.-China trade war intensifies.

Deep Look

After enjoying one of the most explosive single-day rallies in market history, global stocks recoiled sharply on Thursday and Friday, with the aftershocks especially pronounced in Asia. The steep reversals followed the Trump administration’s clarification of a 145% tariff on Chinese imports, a correction from the president’s earlier 125% claim, and China’s swift retaliatory measures.

The financial rollercoaster reflects the intense volatility now driving both Wall Street and international markets as the U.S.-China trade war escalates into one of the most unpredictable economic conflicts of the modern era.

Asia Sinks in Wake of Wall Street Reversal

Asian equity markets were the first to absorb the overnight shockwaves from Wall Street’s Thursday nosedive. Japan’s Nikkei 225 index plunged 5.6% at Friday’s open — wiping out much of the optimism that had temporarily buoyed stocks following Trump’s tariff pause two days earlier.

South Korea’s KOSPI and Australia’s ASX 200 followed suit with notable losses, as investors digested the growing possibility that global trade disruptions may deepen — not ease — in the weeks ahead.

This dramatic shift marks the end of a fleeting investor honeymoon sparked by Trump’s temporary tariff pause, which had been announced midweek and led to a 9.5% surge in the S&P 500 on Wednesday, one of the index’s best one-day performances since World War II.

Wall Street’s Highs Erased: Tariff Confusion and Reality Check

Much of the market euphoria evaporated after the White House clarified the actual tariff levels on Chinese goods: not 125%, as Trump had posted on his Truth Social platform, but 145% — when previously announced levies were factored in.

This correction sent a message to investors that Trump’s tariff strategy may be even more aggressive than previously thought, and that earlier optimism may have been premature.

On Thursday:

The S&P 500 dropped 3.5%
The Dow Jones Industrial Average lost 1,014 points (–2.5%)
The Nasdaq composite plunged 4.3%
At one point, the S&P 500 was down more than 6% intraday

These steep losses erased a significant portion of Wednesday’s historic gains, as concerns mounted that Trump’s pause did little to end the uncertainty around global trade.

China’s Retaliation and the Risk of Prolonged Economic Fallout

In response to the U.S. escalation, China unveiled another round of retaliatory tariffs, this time targeting critical U.S. exports, ranging from agricultural products to electronics components.

The move signals that Beijing is bracing for a long fight, reinforcing the belief among analysts that the trade war has entered a more entrenched and destructive phase.

According to Wendong Zhang, an economist at Cornell University, China has spent years preparing for this type of showdown. While U.S. tariffs will hurt Chinese exports, Zhang says, China may shift demand domestically and deepen trade ties with other partners — a move that could permanently reshape global supply chains.

Investor Anxiety Heightens: Tariffs as Inflationary Pressure

In addition to threatening global growth, the expanding tariff war is also raising fresh fears about inflation.

Tariffs function as a tax on imports, and those costs are often passed along to consumers and businesses. Yale University’s Budget Lab estimated this week that the average U.S. household could lose $4,364 in disposable income annually due to the current tariff regime — even with the 90-day pause.

That impact is particularly worrisome for consumer-driven economies like the U.S. and parts of Asia, where price hikes on everyday goods like electronics, appliances, and auto parts could dampen retail activity and business confidence.

Market Volatility: A New Normal?

The events of this week underscore a larger, ongoing trend: economic policy uncertainty is now a central driver of market behavior. From tariffs and trade wars to interest rate policy and diplomatic tensions, investors are being whiplashed by an unprecedented mix of headlines.

The VIX volatility index, often dubbed the market’s “fear gauge,” spiked sharply after the tariff correction was announced, and traders are increasingly looking for safe havens in bonds, gold, and cash equivalents.

Market strategists warn that until there is a credible and sustained de-escalation in the U.S.-China conflict, equity markets will remain highly sensitive — vulnerable to wild swings on little more than a tweet or a headline.

What’s at Stake: Beyond Stocks

While much attention is focused on stock indexes and investor sentiment, the economic consequences go deeper. The U.S. and China together make up over 40% of global GDP. A prolonged trade battle could:

Slow global growth well into 2026
Increase manufacturing costs globally
Cripple export-driven economies across Asia
Disrupt tech and electronics sectors, with China a dominant supplier
Spark further monetary tightening or easing from central banks trying to balance inflation with recession risk

Countries like Japan, South Korea, Vietnam, and Australia — all closely linked to both U.S. and Chinese trade flows — are particularly vulnerable.

Looking Ahead: The Week That Will Matter

With more trade talks scheduled and at least 75 countries invited to negotiate new terms, the Trump administration is expected to continue issuing country-specific tariff demands. Treasury Secretary Scott Bessent has described them as “bespoke agreements,” a term that has done little to reassure global leaders or markets.

Meanwhile, European leaders, including European Commission President Ursula von der Leyen, have reiterated support for a zero-tariff deal, something Trump has yet to embrace.

As global markets remain on edge, what happens next week could determine whether the recent downturn is a short-term correction — or the beginning of a longer global pullback.