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Financial markets plunged into chaos Monday as President Donald Trump announced sweeping 25% tariffs targeting Japan and South Korea, marking a dramatic escalation in his trade war strategy. The announcement sent shockwaves through Wall Street, with major indices experiencing their steepest declines in months. The Dow Jones Industrial Average slipped 447 points, or 1%. The S&P 500 fell 0.8%, and the Nasdaq Composite lost 0.9%. Trading floors witnessed panic selling as investors processed the implications of Trump's latest trade offensive.
Stocks took a turn lower on Monday around noon after President Donald Trump shared that he had issued letters to Korea and Japan announcing 25% tariffs on goods from those countries, according to posts from his Truth Social account. The timing caught markets completely off guard during what had been relatively stable trading.
Earlier market sessions had already shown signs of strain from ongoing trade tensions. The S&P 500 tumbled 3.5 percent on Thursday, signaling renewed investor concern about the worsening trade war with China and the destabilizing effects of President Trump's tariff policies. These earlier declines had established a pattern of extreme volatility. One day after the stock market had its best day since 2008 as it reacted to Mr. Trump's decision to postpone many of his tariff plans for three months, Thursday saw a significant portion of those gains wiped away.
Treasury Secretary Scott Bessent maintained confidence despite market turmoil. "I don't see anything unusual," Scott Bessent, the Treasury secretary, told reporters, referring to recent market activity. This dismissive response highlighted the administration's unwavering commitment to its trade agenda.
The tariff announcement comes amid escalating tensions with multiple trading partners. Early Thursday, the president clarified that he had raised tariffs on Chinese goods by a total of 145 percent since taking office. This staggering increase demonstrates the administration's willingness to weaponize trade policy. Bond markets reflected growing economic uncertainty. In the government bond market, U.S. Treasuries started to sell off again, with the yield on 10-year Treasuries climbing to around 4.4 percent, the highest since February.
Corporate America faced mounting pressure from trade disruptions. "If this lasts long term, we're going to have a significant number of farmers going out of business," said Caleb Ragland, a Kentucky farmer who is president of the American Soybean Association.
