World markets crater, worst fears confirmed

Trillions of dollars have been wiped off stocks and some of the world’s biggest companies have seen staggering losses as fears of a global recession rise.

Trillions of dollars have been wiped off US stocks and some of the world’s biggest companies have seen staggering losses as fears of a global recession rise.

Wall Street led a global markets bloodbath overnight as countries around the world reeled from President Donald Trump’s trade war, while the White House insisted the US economy will emerge victorious.

The S&P 500 — an index of the biggest 500 companies in the US — recorded its biggest one-day decline since 2020. The widely watched Wall Street index closed down 4.8 per cent — its worst trading day since June 2020. The tech-rich Nasdaq Composite tanked 6 per cent.

Household brands have not been spared in the chaos.

Nike just lost nearly $10 billion in market cap in under an hour — this is largely because President Trump slapped a 46 per cent tariff on Vietnam, where Nike has over 450,000 workers and 130 factories. The stock cratered nearly 7 per cent, and investors hit the panic button.

Nike’s share price on opening today.

Nike is copping it hard. Picture: Michael M. Santiago / GETTY IMAGES NORTH AMERICA / Getty Images via AFP

Nike had been under pressure before this as traditional powerhouses of sportswear saw their market shares cut by newcomers moving up the pack.

Australian stocks are poised to drop again today too after shedding almost $60 billion in trading yesterday. Futures shows the ASX200 — the biggest 200 companies in the nation — will drop by 1.2 per cent on opening today.

Shock waves also tore through markets in Asia and Europe in the wake of President Trump’s Liberation Day — while foreign leaders prepared to negotiate but also threatened counter-tariffs.

President Trump slapped 10 per cent import duties on all nations and far higher levies on imports from dozens of specific countries — including top trade partners China and the European Union.

Separate tariffs of 25 per cent on all foreign-made cars also went into effect and Canada swiftly responded with a similar levy on US imports.

Traders work on the floor of the New York Stock Exchange. Picture: CHARLY TRIBALLEAU / AFP)

In a sign of the real-world impacts expected to become common, Stellantis — the owner of Jeep, Chrysler and Fiat — paused production at some Canadian and Mexican assembly plants.

President Trump dismissed the turmoil, insisting to reporters as he left for a weekend at his Florida golf resorts, that stocks will “boom.”

‘Trust Donald Trump’

President Trump, 78, says he wants to make the United States free from reliance on foreign manufacturers in a massive economic reshaping.

And he likened his trade policy declaration to a painful medical procedure. “THE OPERATION IS OVER! THE PATIENT LIVED,” he posted on his Truth Social app, with his trademark use of all-caps.

“THE PATIENT WILL BE FAR STRONGER, BIGGER, BETTER, AND MORE RESILIENT THAN EVER BEFORE.” Amid howls of protest abroad and from even some of Trump’s Republicans, Commerce Secretary Howard Lutnick called for patience.

“Let Donald Trump run the global economy. He knows what he’s doing,” he said on CNN. “You’ve got to trust Donald Trump in the White House.” But China demanded that the tariffs be immediately cancelled and vowed countermeasures, while France and Germany warned that the EU could hit back at US tech firms.

US President Donald Trump walks to board Air Force One at Joint Base Andrews in Maryland on April 3, 2025. Trump is travelling to the Trump National Doral Golf Club in Florida before going to his Mar-a-Lago resort. (Photo by Mandel NGAN / AFP)

French President Emmanuel Macron called for suspending investment in the United States until what he called the “brutal” new tariffs had been “clarified.” The 27-nation EU and other countries also showed willingness to negotiate as they refrained from immediate retaliatory measures, with almost a week until the harsher US levies actually take effect.

Beijing said it was “maintaining communication” with Washington over trade issues, and EU trade chief Maros Sefcovic planned to speak with US counterparts on Friday.

However, Brazil’s president vowed to take “all appropriate measures.” Gold — a safe-haven investment — hit a new record prices, oil fell and the dollar slumped against other major currencies.

The head of the World Trade Organisation, which helps manage global trading, warned the upheaval may lead to contraction of “one percent in global merchandise trade volumes this year.”

Global economic ‘sumo wrestler’

President Trump has brushed off warnings about triggering a global economic slowdown and politically damaging price rises at home.

Republican Senator Mitch McConnell broke ranks with President Trump, slamming tariffs as “bad policy.”

“Preserving the long-term prosperity of American industry and workers requires working with our allies, not against them,” he said.

But while Trump is under pressure to avoid a drawn-out trade war, he appears determined to stick with the tariffs until he forces competitors to play by US rules.

White House spokeswoman Karoline Leavitt told CNN that President Trump made it clear that “this is not a negotiation.” And Lutnick also struck a hard line, saying, “You can’t really fight with the United States.” “You fight... the greatest customer in the world, you’re going to lose. We are the sumo wrestler of this world,” he said.

‘Treat us badly’

President Trump reserved some of the heaviest blows for what he called “nations that treat us badly.” That included an additional 34 per cent on goods from China — bringing the new added tariff rate there to 54 percent.

The figure for the European Union was 20 per cent, and 24 per cent on Japan. For the rest, President Trump said he would impose a “baseline” tariff of 10 per cent, including on another key ally, Britain, which will come into effect on Saturday while the higher duties will kick in on April 9.

Tariffs could push up inflation, slow growth

The trade uncertainty fuelled by recent tariffs will likely raise the risks of higher inflation and slower growth, and pose challenges for Federal Reserve policy, a senior banking official said Thursday.

As the US central bank, the Fed has a dual mandate to tackle inflation and unemployment, and faces the unenviable task of charting a path through the uncertainty thrown up by President Trump’s tariff announcement on Wednesday, which has roiled financial markets.

Inflation remains stuck above the Fed’s long-term target of two percent, while growth has been solid and unemployment has hugged close to record lows. Against this backdrop, and the looming threat of additional tariffs, it paused rate cuts in recent months.

The US economy is being smashed. Picture: SPENCER PLATT / GETTY IMAGES NORTH AMERICA / Getty Images via AFP

Speaking in Pennsylvania on Thursday, Federal Reserve board of governors member Lisa Cook said her baseline forecast still expects growth to slow “moderately” this year, with an uptick in inflation and a stalled inflation fight, “in part because of tariffs and other policy changes.”

While it is possible that the disruption from tariffs could be minimal, Cook said in prepared remarks that she placed “more weight on scenarios where risks are skewed to the upside for inflation and to the downside for growth.”

“Such scenarios, with higher initial inflation and slower growth, could pose challenges for monetary policy,” she added, alluding to the challenges that the Fed would face, seeking to lower inflation without then sparking a spike in the unemployment rate.

Cook said she was also closely monitoring whether a short-term spike in inflation could spark “more widespread” price increases.

“Tariffs on steel and aluminum have already raised prices for those manufacturing inputs,” she said. “As those cost increases work their way through the manufacturing process, they could boost prices of a range of goods over time.” Using the motor vehicle industry as an example, Cook noted that the combined effect of steel and aluminum tariffs and auto levies could affect the price of new cars, feeding through into higher prices for used vehicles.

“And, as seen in recent years, higher prices for motor vehicles could, with a lag, raise costs for related services, such as rentals, insurance, and car repair,” she said.

“Amid growing uncertainty and risks to both sides of our dual mandate, I believe it will be appropriate to maintain the policy rate at its current level while continuing to vigilantly monitor developments that could change the outlook,” she added.