US stock gains wiped out after Trump tariff move

American stock markets have suffered significant losses, erasing all the gains made since President Trump’s second-term inauguration in January. Investor concerns over the wide-reaching economic consequences of a fresh wave of tariffs have triggered a sharp sell-off across major indices.

On Tuesday, the S&P 500 index dropped by 71.57 points, a 1.2 per cent loss on the day, closing at 5,778.15. Since January, the benchmark index has declined by 3.6 per cent. The Dow Jones Industrial Average fell 670.25 points, equivalent to a 1.6 per cent decline, ending at 42,520.99, while the tech-heavy Nasdaq was hit harder, closing down 0.4 per cent at 18,285.16, marking a 6.9 per cent nosedive since Trump resumed office.

The new tariffs include a delayed 25 per cent tax on imports from Canada and Mexico, alongside a doubled 20 per cent tax on Chinese goods. The measures have amplified fears of a global trade war, spreading tremors across European markets, where Germany’s Dax index sank 3.13 per cent and France’s CAC 40 index lost 2 per cent. London’s FTSE 100 fell by 1.13 per cent, with the FTSE 250 dropping even further at 2.04 per cent.

The pound showed mixed performance against major currencies, inching higher against the dollar to $1.27 while declining 0.23 per cent against the euro to €1.207. Oil prices also felt the strain, with Brent crude falling by 1.73 per cent to $70.39 per barrel, contributing to drops in FTSE-listed energy giants BP and Shell, which lost 6.11 per cent and 3.54 per cent respectively.

Economists have raised concerns about Trump’s aggressive trade policies. George Saravelos, Deutsche Bank’s head of FX research, warned of a ripple effect on global economies and the potential loss of the dollar’s safe-haven status amidst a weaker economic outlook for the United States. The tariffs also risk pushing America’s current account deficit beyond 4 per cent of GDP.

China has retaliated by imposing tariffs between 10 per cent and 15 per cent on US agricultural products, while Canada has announced taxes on $107 billion worth of American goods. Mexico is expected to reveal its response by the weekend, escalating fears of wider economic disruption.

As investors brace for the fallout, US Treasury bond yields have fallen, with markets predicting further interest rate cuts by the Federal Reserve to mitigate the economic slowdown. The drop in equity values echoes across multiple sectors, making clear the far-reaching impact of Trump’s volatile trade strategy.