Markets resumed their downward spiral on Tuesday after the White House confirmed it would proceed with a cumulative 104% tariff on Chinese imports, reigniting fears of a prolonged global trade war. The news reversed early gains and sent Wall Street sharply lower into the close.
The Dow Jones Industrial Average lost 320 points, or 0.84%, closing at 37,645.59. That brings its four-day decline to over 4,500 points. The S&P 500 fell 1.57% to 4,982.77, closing below the 5,000 mark for the first time in nearly a year, and now sits on the cusp of bear market territory. The Nasdaq Composite dropped 2.15% to 15,267.91, and has shed over 13% in just four sessions.
Apple, which relies heavily on Chinese supply chains, was hit hardest—falling nearly 5% and bringing its losses for the week to more than 20%. Shares in Nike and other China-exposed firms also slumped.
Markets had opened higher on hopes of diplomatic engagement, buoyed by Trump’s upbeat post about a call with South Korea’s acting president and comments from Treasury Secretary Scott Bessent suggesting more than 70 countries were seeking tariff deals. But the White House’s confirmation that the 104% tariff rate would take effect after midnight triggered a rapid sell-off.
Europe rebounds, but threat of retaliation looms
In contrast, European stocks closed sharply higher, with the Stoxx 600 rising 2.72%, snapping a four-day losing streak. The rebound came despite Trump rejecting a European offer for a zero-tariff deal on industrial goods.
EU leaders signalled a willingness to negotiate, but also warned of retaliatory tariffs targeting up to €26bn of U.S. goods, set to roll out in two waves starting next week. Trade Commissioner Maroš Šefcovic said the bloc remained open to talks—but would “not wait endlessly.”
Asia claws back losses amid tariff tensions
Asian markets bounced on Tuesday after a historic sell-off the day before. Japan’s Nikkei 225 surged 6%, while the CSI 300 in mainland China rose 1.7%, and Hong Kong’s Hang Seng gained 2%.
Still, analysts warned the rally may prove fleeting. China’s Ministry of Commerce vowed to “fight to the end” if Trump escalated tariffs further, labelling the US approach “unilateral bullying.” The People’s Bank of China also allowed the yuan to weaken further, signalling its readiness to absorb economic shocks.
Sentiment in Tokyo was lifted by news that Japan’s economy minister would lead direct trade talks with US officials, but volatility remained high across Southeast Asia, with Indonesia’s Jakarta Composite down nearly 8% and Vietnam sliding more than 6%.
Commodities
WTI crude is trading 1.85% lower at US$59.58 a barrel.
Spot gold is 0.04% higher at US$2,984.33 an ounce.
Australia set to follow Wall Street lower
The SPI futures are pointing to a 142 point or 1.88% fall today, entirely erasing Tuesday’s 2.3% rally.
Materials stocks look especially vulnerable after US-listed shares of BHP and Rio Tinto fell sharply. The Australian dollar, which had recovered to 60.65 US cents, may also come under renewed pressure. It’s currently trading at 59.45 US cents.
