Global financial markets remain in disarray today following a dramatic plunge yesterday, April 7, 2025, triggered by U.S. President Donald Trump’s aggressive tariff policies. The sweeping tariffs imposed by the U.S., met with swift retaliation from major economies like China, sent European and Asian stock indices into a tailspin, stoking fears of a global recession. Key indices, including Japan’s Nikkei, Hong Kong’s Hang Seng, and the broader Topix, saw drops of up to 10% on Monday, marking one of the most severe single-day declines in recent years.
The chaos erupted late last week when Trump unveiled a broad 10% tariff on imports from nearly every country, with steeper rates—54% on Chinese goods and 46% on products from nations like Vietnam—targeting key U.S. trading partners. Branded “Liberation Day” by the administration, the policy aimed to bolster American manufacturing but instead unleashed havoc across global supply chains. China’s retaliatory 34% tariff on all U.S. goods, announced shortly after, escalated tensions, culminating in yesterday’s massive sell-off that erased trillions of dollars from global stock markets.
Asia bore the brunt of the downturn. On April 7, Hong Kong’s Hang Seng Index plummeted more than 13%, its worst single-day drop since 1997, as investors reacted to disrupted trade with the U.S. and mainland China. Japan’s Nikkei 225 fell 7.9%, hitting an 18-month low, while the Topix index shed 7.7%, with trading halted briefly by circuit breakers. Major firms like Sony saw shares drop over 10%, underscoring the fragility of Asia’s export-driven economies. Mainland China’s Shanghai Composite Index and CSI300 each declined around 7%, as Beijing’s countermeasures deepened concerns over a prolonged trade war.
European markets also suffered yesterday. Germany’s DAX fell 9% at its opening before recovering slightly, while London’s FTSE 100 dropped about 5% amid fears of a broader economic slowdown. Analysts point to Asia’s sharper declines as a reflection of its heavy reliance on U.S. exports, now jeopardized by Trump’s protectionism. “The sudden 34% tariff on Chinese goods struck at the heart of export sectors like semiconductors and electric vehicles, sparking a rapid repricing across Asian markets,” said Dilin Wu, a research strategist at Pepperstone.
Today, U.S. markets are bracing for further volatility. After the S&P 500 fell nearly 6% last Friday—its worst week since 2020—futures suggest a potential bear market, with a 20% drop from its peak looming as Wall Street opens. Billionaire investor Bill Ackman has cautioned that Trump’s policies could “destroy confidence” in the U.S. as a trade partner, urging a halt to prevent an “economic nuclear war.”
Recession fears are intensifying. Goldman Sachs has upped its U.S. recession odds to 45% within the next year, from 35%, while JPMorgan pegs the likelihood at 60%. Economists warn that the tariffs could fuel inflation, disrupt supply chains, and curb consumer demand, especially in export-reliant Asia. Taiwan’s market, a semiconductor hub, saw a record 10% drop yesterday, highlighting the vulnerability of tech-heavy indices.
As Asia and Europe push for talks with Washington, the outlook remains bleak. China’s state media vows resilience against “U.S. tariff bullying,” while Taiwan’s President Lai Ching-te has floated increased U.S. purchases to ease trade tensions. Yet, Trump’s refusal to relent—dismissing market woes as “medicine” for long-term gains—signals a protracted conflict. Investors are flocking to safe havens, with gold hitting a record $3,130.19 per ounce yesterday, as markets brace for ongoing uncertainty.