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President Donald Trump signaled a potential shift in his trade policy on Thursday as global markets experienced one of their worst days since the pandemic. Speaking from Air Force One, Trump expressed openness to negotiating tariffs with countries offering “phenomenal” deals, reversing his earlier stance that tariffs were final. The White House had previously stood firm on the measures, which have now led to confusion and heightened anxiety among investors. Trump’s new tariffs, affecting 180 countries, triggered significant sell-offs on Wall Street, erasing around $2 trillion from the S&P 500 market value.

Trump’s Shift in Tariff Strategy:

On Thursday, President Trump opened the door to potential negotiations, stating he would consider deals with countries that make favorable offers. “If they give us something good, we’ll talk,” Trump said, signaling a softer approach to the tariffs, which had previously been described as non-negotiable. This shift in rhetoric comes after markets experienced a dramatic drop, causing widespread panic among investors.

Despite the sudden change in tone, Trump defended the tariff measures, calling them temporary. He assured that the economy would “boom” again once the dust settled. However, the uncertainty surrounding the new tariffs continued to stir concerns about their long-term impact on global business confidence.

Market Impact:

The announcement of new tariffs sent shockwaves through global markets, resulting in one of the most significant sell-offs since the 2020 pandemic crash. The Dow Jones Industrial Average lost over 1,600 points, a 3.98% drop. The S&P 500 followed suit, falling 4.84%, while the Nasdaq saw a sharp 5.97% decline.

Tech stocks were hit particularly hard, with Apple falling 9.25% due to concerns over supply chain disruptions and reduced sales in China. Amazon and Meta both saw their stock prices drop by 9%, while Nvidia plunged 7.8%. Other tech giants, including the Magnificent Seven, experienced losses ranging from 2% to 6%.

Retail stocks also took a hit. Nike’s stock dropped 14.4%, Lululemon fell 9.6%, and Ralph Lauren lost 16.3%. These losses reflect investor concerns about the broader economic implications of Trump’s tariff strategy and the potential for reduced consumer spending.

Currency and Bond Markets React:

As investors fled from US assets, the US dollar index fell to its lowest level since October 2024, dropping below 102. Meanwhile, safe-haven currencies such as the euro, yen, and Swiss franc saw increased demand, strengthening against the dollar. US Treasury bonds also experienced a sharp drop in yields, with the 10-year note falling by 9 basis points to 4.04%.

Gold, traditionally seen as a safe-haven asset, rallied in response to the market turmoil. However, after reaching a daily peak, gold prices retreated slightly due to profit-taking from investors looking to lock in gains.

European Markets Suffer as Trade Tensions Escalate:

The impact of Trump’s new tariffs was felt globally, with European markets closing sharply lower. The Stoxx 600 index fell by 2.7%, while Germany’s DAX dropped 3.01%, and France’s CAC 40 lost 3.31%. The new 20% tariff on EU goods, which caught European investors off guard, fueled concerns about the stability of transatlantic trade relations.

In response, French President Emmanuel Macron urged European companies to pause US investments as a precautionary measure. Luxury brands, which rely heavily on US consumers, were among the hardest hit. LVMH dropped 5.62%, Hermès lost 3.51%, Richemont fell 6.32%, and Kering saw a 7.51% decrease in stock price. Adidas, a company with substantial exposure to the US market, plunged 12%.

Automotive Sector Faces Pressure:

The automotive sector also felt the brunt of the tariff news, with European carmakers seeing their stock prices slide. Volkswagen shares fell 4.42%, BMW dropped 3.55%, and Porsche declined by 3.06%. The fear is that continued trade tensions could lead to further losses in the sector, as higher tariffs on vehicles could stifle demand.

The impact of President Trump’s new tariff strategy on global markets has been severe, with significant declines in both US and European stock indices. The uncertainty surrounding the implementation of these measures is likely to persist, affecting business confidence and market stability in the coming weeks. As the US government prepares to impose further tariffs starting April 5, many sectors, including technology, retail, and automotive, face heightened risks.

Analysts warn that the global economy may continue to feel the effects of these trade tensions for some time. Investors are closely monitoring developments, with some hoping for a resolution through negotiations. However, until a clear path forward emerges, the markets are expected to remain volatile, and the future of international trade could hinge on the outcomes of talks between Washington and its global counterparts.