Wall Street shuddered as President Trump announced sweeping tariffs on countries across the globe on Wednesday, with the administration unveiling higher taxes on imports than investors had expected, weighing on markets around the world.
Futures on the S&P 500, which allow investors to trade the index outside normal trading hours, slumped over 3 percent, while global stock benchmarks also came under pressure. In Japan, the Nikkei 225 index was down almost 4 percent in early trading.
The slide came after Mr. Trump held up a table listing broad tariffs to be levied on imports from different countries, including a 34 percent tax on Chinese imports, 20 percent on goods coming from the European Union and a 24 percent tariff on Japanese imports.
The initial market reaction suggested that the scale of the tariffs on Wednesday had come as a surprise, and analysts were still trying to figure out how the figures had been derived. Shortly after the announcement, some analysts remained confused about the numbers quoted by the administration.
“I think the numbers are shockingly high compared to what people were expecting and it is inexplicable in many ways,” said Peter Tchir, head of macro strategy at Academy Securities. “I think it’s a disaster.”
The administration had adjusted its estimates of the tariffs imposed on the United States to include adjustments for what it deemed currency manipulation or even other taxes, with analysts questioning the analytical basis for doing so.
“Trump is going to war with countries on this,” said Andrew Brenner, head of international fixed income at National Alliance Securities. “It’s ridiculous. It shows no comprehension as to what he is doing to other countries. And it is going to hurt the U.S.”
Others concluded that the high levels were the starting point for further negotiations.
“Eye-watering tariffs on a country-by-country basis scream ‘negotiation tactic,’ which will keep markets on edge for the foreseeable future,” said Adam Hetts, global head of multi-asset at Janus Henderson Investors. “Fortunately, this means there’s substantial room for lower tariffs from here.”
Stock markets globally have been choppy in recent weeks, as investors have been whipsawed by the administration’s mixed tariff messages.
The uncertainty around the tariff levels has left investors unable to assess the potential ramifications for consumers, businesses and the broader economy.
“This ‘liberation day,’ I call it tariff-palooza,” said George Goncalves, head of U.S. macro strategy at MUFG Securities, speaking before Mr. Trump’s announcement, adding that “a lot of damage” had been done to the “psychology of this market.”
“This is meant to keep you guessing,” he said. “That’s part of the strategy.”
Uncertainty has “paralyzed” investors, consumers and business leaders, Mr. Goncalves said, further pressuring the economy as activity slows.
Through Wednesday, the S&P 500 had fallen 7.7 percent below its most recent peak in February. From that peak on Feb. 19 through the end of March, 10 of 11 sectors have fallen.
The Nasdaq Composite index, which is chock-full of the tech stocks that have come under pressure during the latest bout of selling, has tumbled even further, down almost 13 percent since its peak in December. Futures on the index tumbled over 4 percent Wednesday evening.
Meanwhile, the Russell 2000 index of smaller companies more exposed to the ebb and flow of the economy, and therefore arguably more of a bellwether for American businesses, is more than 16 percent below its peak in November.
Signs of worry have also been evident in the rapid rise in the price of gold. Investors have flocked to the precious metal, sending it 19 percent higher in the first three months of the year, its biggest quarterly rise since 1986.
And while many investors worry about the inflationary effect of tariffs, falling bond yields and a declining U.S. dollar suggest that most are more worried about waning economic growth.
The dollar slid as Mr. Trump spoke from the White House Rose Garden — one of the few assets that investors could trade as the president unveiled his latest tariffs.
Some investors had hoped that the tariff announcement on Wednesday would cure some of the uncertainty in the financial markets. But few truly expected the news to mark the end of Mr. Trump’s tariff talk and with it an end to the volatility in the stock market.
Ahead of the announcement, prices in the equity options market, where investors can place bets that protect them against sharp moves in the stock market, suggested a consensus view that volatility would remain, said Mandy Xu, head of derivatives market intelligence at Cboe Global Markets.
“Investors no longer see tariffs as a one-time event risk, but an always-present risk,” she said, adding that the current expectation in the market is for volatility to persist, “given ongoing tariff and growth worries.”
