Just when it seemed the stock market couldn’t get any worse, it did. Stocks again slid after the United States announced on Tuesday that 104% tariffs on China would take effect shortly after midnight. This coincided with the administration of President Donald Trump seeking to negotiate and reassure other trading partners that were targeted by sweeping tariffs. As a result, U.S. stocks dropped on Tuesday for a fourth straight trading day since Trump’s tariff announcement last week, with the S&P 500 closing below 5,000 for the first time in almost a year. The index is now 18.9% below its most recent high on February 19, which is close to the 20% decline that defines a bear market.
Global markets previously posted gains on hopes that Trump might be willing to negotiate with countries. These product-specific trade barriers are affecting the world’s largest consumer market. But the White House made clear that country-specific tariffs of up to 50% would nevertheless take effect at 12:01 a.m. Eastern Time (0401 GMT), as planned. Despite the side effects on the market.
The tariffs are especially steep for China, as Trump has ratcheted up duties on its imports to 104% in response to the counter-tariffs Beijing announced last week. As a result, China has also announced that it refuses to bow to what it called blackmail and has vowed to fight to the end of this trade war. On the other hand, Trump administration officials have also said that they don’t prioritize negotiations with the world’s No. 2 economic power.
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Trump’s sweeping tariffs have raised fears of recession and upended a global trading order that has been in place for decades. Meanwhile, China is bracing for a war of attrition, and manufacturers are warning about profits and scrambling to plan new overseas plants. It has cited internal risks, and the 2025 GDP growth forecast for China has gone to 4.2% from 4.7%.