The U.S. stock market plunged Friday after President Donald Trump announced plans to raise tariffs on Chinese imports, wiping out about $2 trillion in market value in a single day.
At 10:57 a.m. ET, Trump posted on his Truth Social account that China was “becoming very hostile” toward the world and accused Beijing of holding nations “captive” through its “monopoly” on rare earth metals. The post also revealed that the administration was considering “a massive increase of tariffs on Chinese products coming into the United States of America.”
The brief statement was enough to send Wall Street into a tailspin. The S&P 500 fell 2.7%, its sharpest drop since April, when markets reacted to Trump’s earlier “liberation day” tariff rollout. The Nasdaq Composite sank 3.56%, and the Dow Jones Industrial Average lost 879 points, or 1.9%, marking their worst performances in months. The Russell 2000 index also dropped 3%.
According to Bespoke Investment Group, about $2 trillion in U.S. stock market value vanished after the post. The sell-off hit technology firms hardest, particularly those with exposure to China. Nvidia shares fell 5%, AMD plunged nearly 8%, Apple lost 3%, and Tesla dropped 5%. Financial stocks like Bank of America and Wells Fargo each declined more than 2%.
Investors had been optimistic that trade relations between Washington and Beijing were improving ahead of a scheduled meeting between Trump and Chinese President Xi Jinping at the upcoming APEC summit. Markets had largely adapted to the existing 40% tariff rate on Chinese goods and expected further negotiations to ease tensions.
Trump’s comments reignited fears of a full-blown trade war, particularly after China tightened restrictions on its rare earth exports this week. Beijing, which controls about 70% of global rare earth supply, announced new licensing rules that could limit foreign access to the metals used in semiconductors, electric vehicles, and missile systems.
The volatility intensified after the closing bell, when Trump said the United States would impose 100% tariffs on Chinese imports “over and above any tariff that they are currently paying” starting next month. He also mentioned plans for export controls on critical software, which could further strain technology supply chains.
Despite the steep sell-off, some analysts advised caution before panicking. Jay Woods, chief market strategist at Freedom Capital Markets, said the downturn might prove temporary. “The good news is that this may just be another negotiating tactic used by the administration that could yield good results over the long term,” Woods said. “The knee-jerk sell-off should be another buying opportunity.”
While Friday’s plunge marked a sharp reversal from weeks of market calm, the S&P 500 remains up over 11% this year, buoyed by strong gains in artificial intelligence stocks. Still, analysts warn that further instability could emerge if Trump’s tariff threats materialize or if China retaliates with restrictions on U.S. goods.
Stock futures reopen Sunday evening at 6 p.m. ET, with investors bracing for another volatile week. The bond market will remain closed Monday in observance of Columbus Day.
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