April, 2025: Trump's new tariff policies severely hit the American business sector and stock market, causing the Dow Jones index to plummet by 700 points.
In April 2025, President Trump’s new round of tariff policies shocked the business community and the stock market. The automotive, pharmaceutical, technology, and retail industries faced rising costs and layoff pressures, as the Dow Jones index dropped nearly 700 points in a single day. Although the Trump administration announced a 90-day suspension of some tariffs, market uncertainty stayed high, and businesses and consumers shouldered the costs of the trade war. The tariff policy caused supply chain disruptions, increased consumer spending, heightened inflationary pressures, and raised the risks of slowing economic growth.
Key Updates
04/17 01:18
April, 2025: Trump's new tariff policies severely hit the American business sector and stock market, causing the Dow Jones index to plummet by 700 points.
In April 2025, President Trump’s new round of tariff policies shocked the business community and the stock market. The automotive, pharmaceutical, technology, and retail industries faced rising costs and layoff pressures, as the Dow Jones index dropped nearly 700 points in a single day. Although the Trump administration announced a 90-day suspension of some tariffs, market uncertainty stayed high, and businesses and consumers shouldered the costs of the trade war. The tariff policy caused supply chain disruptions, increased consumer spending, heightened inflationary pressures, and raised the risks of slowing economic growth.
Overview of Tariff Policy and Implementation Context
On April 2, 2025, the Trump administration announced a 10% standard tariff on global imports and additional tariffs ranging from 20% to 49% on over 60 countries with the largest trade deficits against the US. Tariffs on China were as high as 125%, marking one of the largest shifts in US trade policy history. Trump claimed this move aimed to reduce the trade deficit, promote the return of American manufacturing, and strengthen national security.
However, according to data from US Customs and the Treasury Department, despite Trump's claim that tariffs could generate $2 billion in daily revenue for the US, the actual daily revenue was only about $250 million, indicating a significant discrepancy between the policy's effectiveness and expectations.
Business Reaction: Rising Costs and Layoffs
Many American companies have felt the direct impact of the tariffs. Automaker Stellantis and appliance brand Whirlpool announced thousands of layoffs. Although Whirlpool attributed the layoffs to weak demand, surveys showed that the uncertainty of tariff policy had suppressed consumer spending, indirectly leading to a decline in performance.
The tech industry was among the first to be affected. AI chip giant Nvidia stated that due to export restrictions and tariff impacts, it would incur an accounting loss of $5.5 billion. AMD estimated a loss of $800 million. Chip equipment suppliers like ASML also warned that their business outlook for 2025 and 2026 had become uncertain due to tariffs.
The pharmaceutical and defense industries faced similar supply chain risks. The US relies on China for 70% of its pharmaceutical raw materials, and its rare earth processing capacity accounts for only 10% of global demand. Tariff policies have hindered raw material imports, forcing companies to seek alternative suppliers, increasing operating costs.
Consumer and Household Spending Pressure
The Peterson Institute for International Economics estimated that if tariffs were fully implemented, the average annual expenditure for a typical American household would increase by $4,500, and production costs for businesses could rise by 15%. These costs would ultimately be passed on to consumers, exacerbating inflationary pressure.
Federal Reserve Chairman Powell pointed out that tariff policies could weaken the Fed's dual mandate of price stability and employment promotion. He warned that inflation might rise further, while economic growth faced the risk of slowing down.
Severe Stock Market Volatility
Trump's tariff policy triggered severe fluctuations in the US stock market. On April 16, the Dow Jones Industrial Average fell nearly 700 points, while the S&P 500 and Nasdaq dropped by 2.24% and 3.07%, respectively. Tech stocks were hit hardest, with Nvidia's stock price falling 6.9% in a single day, and the Philadelphia Semiconductor Index also plummeting.
According to ABC News, this wave of volatility was described as "one of the most turbulent periods in Wall Street history." Financial strategists noted that stock price fluctuations were no longer driven by corporate fundamentals but by White House policies and statements, making it difficult for investors to predict the next move.
International and Supply Chain Impact
After the escalation of the US-China trade war, China also raised tariffs on US goods to 125%. China simultaneously accelerated the integration of its rare earth industry and domestic chip substitution plans, and promoted a "de-dollarization" trade network with ASEAN countries to reduce reliance on the US dollar.
In the Chinese market, the market presence of American brands declined. Nike's revenue in China fell by 17% annually, Tesla's sales dropped by 12%, and Apple and Starbucks also issued performance warnings. Chinese domestic brands like Huawei, Anta, and Mixue Bingcheng quickly rose, capturing market share from American brands.
Investor Confidence and Economic Expectations
A survey by Bank of America showed that 42% of fund managers expected the US economy to fall into recession, with pessimism about the global economic outlook reaching a 30-year high. The Peterson Institute estimated that the US economic growth rate in 2025 would drop to 0.1%, with an inflation rate of 4.5% and an unemployment rate rising to 5%.
The World Trade Organization (WTO) also downgraded its global trade outlook for 2025, predicting that global merchandise trade volume would shrink by 0.2%. If the US continued to push for reciprocal tariffs, the shrinkage could expand to 1.5%.
Policy Inconsistencies and Market Uncertainty
On April 9, the Trump administration announced a 90-day delay in the implementation of additional tariffs on countries other than China and initiated negotiations. Although this move temporarily boosted market sentiment, the policy inconsistencies and lack of clear direction still made it difficult for businesses and investors to make long-term plans.
Recent technical failures at the US Department of Commerce and Customs also led to importers being unable to enter exemption codes, further exacerbating market chaos. Companies like Temu and Shein have already notified consumers of impending price increases, reflecting market expectations of rising future costs.
