Wall Street in trouble as Trump escalates tariff war with China
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US stock markets plunged Friday as Trump threatened a massive increase in tariffs on China, triggering Wall Street’s worst selloff since April.
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A sign outside the New York Stock Exchange marks the intersection of Wall and Broad Streets, Jan. 28, 2025, in New York. (AP)
Wall Street selloff fears returned in force on Friday as US President Donald Trump reignited his tariff war with China, triggering the sharpest losses in US markets since April.
The S&P 500, widely seen as the leading barometer of US equities, dropped 183 points, or 2.7%, closing at 6,552. It was the index’s steepest daily decline since April 10, when it lost 3.5%. Prior to Friday, the S&P had been on a near five-month rally, repeatedly hitting record highs.
The tech-heavy Nasdaq Composite fell even further, plunging 820 points, or 3.6%, to 22,204. The Dow Jones Industrial Average also posted a significant drop, losing 880 points, or 2%, to end at 45,480.
Market collapses after Trump revives tariff war
The market tumble followed Trump’s announcement of a potential “massive increase” in tariffs on Chinese goods, after Beijing imposed fresh controls on the export of rare earth elements and other critical materials.
"One of the Policies that we are calculating at this moment is a massive increase of Tariffs on Chinese products coming into the United States of America," Trump wrote on his Truth Social platform.
The move by China, announced Thursday, requires foreign companies to obtain special approval for exporting any items containing even trace amounts of Chinese-sourced rare earths. These critical minerals are essential to US industries, powering everything from military radar and jet engines to smartphones and electric vehicles.
Hopes of diplomatic progress fade
Until this latest development, signs of a thaw in US-China trade tensions had emerged, with Trump reportedly planning to meet Chinese President Xi Jinping during the upcoming APEC summit in South Korea. However, in his Friday statement, Trump dismissed the idea, stating there “seems to be no reason to do so” now.
“Expectations for a China trade deal just got swept off the table,” said Jeff Kilburg, founder of KKM Financial, in remarks published by CNBC. “Profit takers are out in full force.”
Trump has already imposed tariffs exceeding 50% on Chinese goods since returning to office earlier this year. In retaliation, China has levied over 30% in duties on US products.
With tensions rising and global markets reacting, analysts warn that continued escalation could bring further volatility and disrupt fragile supply chains already strained by geopolitical conflict.
Read more: Beijing: China–US trade talks to continue despite US shutdown
