Wall Street Drops 20% as Tariffs Rattle Economy/ Newslooks/ WASHINGTON/ J. Mansour/ Morning Edition/ Wall Street plunged into bear market territory as global investors reacted to President Trump’s hardline tariff policies. The S&P 500 dropped over 20% from its peak, while global stocks, oil, and Bitcoin suffered heavy losses. Fears of a recession and rising inflation intensified as markets brace for continued volatility.
Wall Street Bear Market Triggered by Tariffs: Quick Looks
- S&P 500 drops 3.8%, now down over 20% from its peak.
- Dow Jones falls 1,343 points; Nasdaq slides 4.2% in early trading.
- Hong Kong stocks suffer worst day since 1997, down 13.2%.
- U.S. crude oil dips below $60, lowest since 2021.
- Bitcoin crashes below $78,000, off from January’s $100,000 high.
- Trump defends tariffs, calling them “medicine” to fix trade issues.
- JPMorgan CEO warns of higher inflation and slower growth.
- Fed faces constraints in responding due to current inflation levels.
- Market uncertainty rises amid fears of global recession.
Wall Street Drops 20% as Tariffs Rattle Economy
Deep Look
Wall Street Enters Bear Market as Trump’s Tariffs Rattle Global Economy
Global financial markets plunged further on Monday, with Wall Street officially entering bear market territory, as mounting concerns over President Donald Trump’s aggressive tariff policies continue to shake investor confidence and raise fears of a looming global recession.
The S&P 500 fell 3.8% in early trading, extending a slide that has erased more than 20% of its value since peaking less than two months ago. The drop places the index firmly in bear market territory — a status that signals a deeper and potentially more prolonged downturn than typical corrections. The Dow Jones Industrial Average dropped 1,343 points, or 3.5%, while the Nasdaq composite shed 4.2%.
These losses come on the heels of the worst week for U.S. markets since the early days of the COVID-19 pandemic in March 2020. The toll is being felt across asset classes and global markets. Hong Kong’s Hang Seng index plummeted 13.2%, marking its steepest single-day loss since 1997. In commodities, U.S. crude briefly slipped below $60 per barrel — its lowest since 2021 — reflecting concerns that global demand will weaken under the weight of mounting trade barriers. Bitcoin, a relative haven last week, also succumbed to the sell-off, falling nearly 25% from its January peak to trade below $78,000.
The root cause of the market turmoil is clear: Trump’s escalating trade war and the uncertainty surrounding how long it will last. The former president has imposed steep tariffs on a wide array of imported goods, aiming to shrink the U.S. trade deficit and encourage domestic manufacturing. But the abrupt and aggressive approach is sparking global retaliation, disrupting supply chains, and prompting fears of a widespread slowdown.
Despite the market’s reaction, Trump has shown no signs of backing down. Speaking aboard Air Force One on Sunday, he acknowledged the market turmoil but defended his actions.
“Sometimes you have to take medicine to fix something,” he said, echoing previous comments that the tariffs are necessary for long-term economic health.
Investors had long believed Trump, known for touting market gains during his presidency, would reconsider his strategy if stocks began to suffer. But the latest signals suggest he’s unmoved, and some experts worry the pain could be prolonged.
“There’s so much uncertainty going forward about how these tariffs are going to play out,” said Rintaro Nishimura, associate at the Asia Group. “That’s what’s really driving this plummet in stock prices.”
Some investors are still holding out hope for a diplomatic breakthrough. Trump has said global leaders are eager to strike deals, and a reversal of tariffs could restore confidence. However, even a swift resolution may not fully calm the economic waters, especially if inflation continues to rise.
JPMorgan Chase CEO Jamie Dimon warned in his annual letter to shareholders that the tariffs are likely to push inflation higher and increase the risk of recession.
“Whether or not the menu of tariffs causes a recession remains in question,” he wrote, “but it will slow down growth.”
The economic pressure is also testing the Federal Reserve’s ability to respond. In previous downturns, the Fed stepped in by slashing interest rates and deploying stimulus tools. But this time, inflation is already running above target, limiting the central bank’s flexibility. Rate cuts, while potentially helpful in propping up economic activity, could also worsen inflation — a scenario the Fed is eager to avoid.
“This isn’t a situation like 2008 or 2020,” said Nathan Thooft, chief investment officer at Manulife Investment Management. “This is driven largely by policy, not financial system fragility or a public health emergency.”
Thooft also noted that more countries are likely to impose retaliatory tariffs on the U.S., further complicating trade negotiations.
“With so many nations involved, it will take considerable time to work through various deals,” he said. “Uncertainty and volatility are likely to persist for the foreseeable future.”
Trump’s goal is to reduce the U.S. trade imbalance, particularly with nations like China, by curbing imports and encouraging domestic production. Critics, however, point out that global supply chains cannot be realigned overnight, and that consumers are likely to bear the brunt of higher costs in the meantime.
Ultimately, the durability of the bear market and the depth of the economic damage will depend on how quickly trade tensions de-escalate and whether Trump adjusts his strategy. For now, the markets are bracing for more volatility and further declines.
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