Economy·Tariffs and tradeAsiaStocks’ worst swoon since fallout from Liberation Day: Trump Truth Social post on ‘massive increase of tariffs’ shatters calmBy Stan ChoeBy Nick LichtenbergBy The Associated PressBy Stan ChoeBy Nick Lichtenberg EditorNick Lichtenberg EditorNick Lichtenberg is editor and was formerly Fortune's executive editor of global news.SEE FULL BIOBy The Associated Press Friday's stock trading saw a sickening lurch.TIMOTHY A.
CLARY/AFP via Getty ImagesA monthslong calm on Wall Street shattered Friday, and U.S. stocks tumbled after President Donald Trump threatened to crank tariffs much higher on China.
The S&P 500 sank 2.7% in its worst day since April 10. The Dow Jones Industrial Average dropped 878 points, or 1.9%, and the Nasdaq composite fell 3.6%.
Stocks had been heading for a slight gain in the morning, until Trump took to his social media platform and said he’s considering “a massive increase of tariffs” on Chinese imports.
He’s upset at restrictions China has placed on exports of its rare earths, which are materials that are critical for the manufacturing of everything from consumer electronics to jet engines.
“We have been ed by other Countries who are extremely angry at this great Trade hostility, which came out of nowhere,” Trump wrote on Truth Social.
He also said “now there seems to be no reason” to meet with China’s leader, Xi Jinping, after earlier agreeing to do so as part of an upcoming trip to South Korea.
Trump’s sudden announcement of new tariffs recalled April’s big swoon in stock , when the president announced “Liberation Day” with a list of “recical tariffs” for a large number of countries worldwide, sending global plunging.
Within just four days, the S&P 500 fell 12% and the Dow Jones Industrial Average lost nearly 4,600 points, but the U.S.
indexes regained all the lost ground within a month or so as the tariffs played out very differently from Trump’s announcement.
Still, as of October, Federal Reserve Governor Chris Waller, who confirmed to CNBC that he had a “great interview” as a potential replacement for Chairman Jerome Powell, revealed how the tariffs had played out so far: price increases for higher-income consumers as tariffs were passed through, and companies swallowing the cost for any lower-income and price-sensitive shopper.
Moody’s Analytics found that nearly 50% of consumer spending in the economy came from the top 10% of wealthiest Americans, meanwhile, and the tariff revenue is “very significant,” according to Apollo Global Management chief economist Torsten Slok.
The ratchet higher in tensions between the world’s largest economies led to widespread drops across Wall Street, with roughly six out of every seven stocks within the S&P 500 falling.
Nearly everything weakened, from Big companies Nvidia and Apple to stocks of smaller companies looking to get past uncertainty tariffs and trade. The market may have been primed for a slide. U.S.
stocks were already facing criticism that their prices had shot too high ing the S&P 500’s nearly relentless 35% run from a low in April.
The index, which dictates the movements for many 401(k) accounts, is still near its all-time high set earlier in the week.
Critics say the market looks too expensive after prices rose much faster than corporate fits.
Worries are particularly high companies in the artificial-intelligence industry, where pessimists see echoes of the 2000 dot-com bubble that imploded.
For stocks to look less expensive, either their prices need to fall, or companies’ fits need to rise.
Levi Strauss dropped 12.6% for one of the market’s larger losses, even though it reported a stronger fit for the quarter than analysts expected.
Its forecast for fit over the full year was also within range of Wall Street’s estimates, but the jeans and clothing company could simply be facing the challenge of heightened expectations after a big run.
Its stock price came into the day with a surge of nearly 42% for the year so far. All told, the S&P 500 fell 182.60 points to 6,552.51.
The Dow Jones Industrial Average dropped 878.82 to 45,479.60, and the Nasdaq composite sank 820.20 to 22,204.43.
Some of Friday’s strongest action was in the oil market, where the price of a barrel of benchmark U.S. crude sank 4.2% to $58.90.
It fell as a ceasefire between Israel and Hamas came into effect in Gaza.
An end to the war could remove worries disruptions to oil supplies, which had kept crude’s price higher than it otherwise would have been.
Losses accelerated ing Trump’s tariff threat, which could gum up global trade and lead the economy to burn less fuel. Brent crude, the international standard, dropped 3.8% to $62.73 per barrel.
In the bond market, the yield on the 10-year Treasury sank to 4.05% from 4.14% late Thursday.
It had already been lower before Trump made his threats, as a report from the University of Michigan suggested that sentiment among U.S. consumers remains in the doldrums.
“Pocketbook issues high prices and weakening job spects remain at the forefront of consumers’ minds,” according to Joanne Hsu, director of the Surveys of Consumers.
“At this time, consumers do not expect meaningful imvement in these factors.” The job market has slowed so much that the Federal Reserve cut its main interest rate last month for the first time this year.
Fed officials have penciled in more cuts through next year to give the economy additional breathing room. But Chair Jerome Powell has also said they may change course if inflation stays high.
That’s because lower interest rates can push inflation even higher.
One potentially encouraging signal from the University of Michigan’s preliminary survey said consumers’ expectations for inflation in the coming year edged down to 4.6% from 4.7% the month before.
While that’s still high, the direction of change could help the Fed and limit upward pressure on inflation. In stock abroad, indexes fell across much of Europe and Asia.
Hong Kong’s Hang Seng fell 1.7%, and France’s CAC 40 dropped 1.5% for two of the bigger moves. But South Korea’s Kospi leaped 1.7% after trading reopened ing a holiday.
___ AP Writer Teresa Cerojano contributed. Fortune Global Forum returns Oct. 26–27, 2025 in Riyadh. CEOs and global leaders will gather for a dynamic, invitation-only event shaping the future of .
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