Â鶹´«Ã½

The S&P 500 lost 6% after China matched President Donald Trump’s big raise in tariffs announced this week. The move increased the stakes in a trade war that could end with a recession that hurts everyone.

The drop closed the worst week for the S&P 500 since March 2020, when the pandemic crashed the economy. The Dow Jones Industrial Average plunged 2,231 points, or 5.5%, and the Nasdaq composite tumbled 5.8% to pull more than 20% below its record set in December.

So far there have been few, if any, winners in financial markets from the trade war. Stocks for all but 12 of the 500 companies that make up the S&P 500 index fell Friday. The price of crude oil tumbled to its lowest level since 2021. Other basic building blocks for economic growth, such as copper, also saw prices slide on worries the trade war will weaken the global economy.

China’s response to U.S. tariffs caused an immediate acceleration of losses in markets worldwide. The Commerce Ministry in Beijing said it would respond to the 34% tariffs imposed by the U.S. on imports from China with its own 34% tariff on imports of all U.S. products beginning April 10. The United States and China are the world’s two largest economies.

Markets briefly recovered some of their losses after the release of Friday morning’s U.S. jobs report, which said employers accelerated their hiring by more last month than economists expected.

It’s the latest signal that the U.S. job market has remained relatively solid through the start of 2025, and it’s been a linchpin keeping the U.S. economy out of a recession.

But that jobs data was backward looking, and the fear hitting financial markets is about what’s to come.

“The world has changed, and the economic conditions have changed,� said Rick Rieder, chief investment officer of global fixed income at BlackRock.

The central question looking ahead is: Will the trade war cause a global recession? If it does, stock prices will likely need to come down even more than they have already. The S&P 500 is down 17.4% from its record set in February.

Fed warning

The Trump administration’s tariffs will likely lead to higher inflation and slower growth for the U.S. economy, Federal Reserve Chair Jerome Powell said Friday.

Powell said the tariffs, and their likely impacts on the economy and inflation, are “significantly larger than expected.�

He also said the import taxes will probably lead to “at least a temporary rise in inflation,� but added that “it is also possible that the effects could be more persistent.�

“Our obligation is to … make certain that a one-time increase in the price level does not become an ongoing inflation problem,� Powell said in remarks delivered to a conference of the Society for Advancing Business Editing and Writing.

Powell’s focus on inflation suggests the Fed will likely keep its benchmark interest rate unchanged at about 4.3% in the coming months, rather than cut them anytime soon.

Trump urged Powell to cut rates, citing lower inflation and energy prices on his social media platform.

“This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates,� Trump wrote. “CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!�

Economists expect the tariffs will weaken the economy, possibly threaten hiring, and push up prices. In that scenario, the Fed could cut rates to bolster the economy, or it could keep rates unchanged — or even hike them — to combat inflation. Powell’s comments suggest the Fed will mostly focus on inflation.

China hits back

China on Friday took the retaliation route by imposing a 34% tariff beginning April 10 on the imports of all U.S. products, matching the added 34% imposed on Wednesday by Trump on Chinese imports along with increased tariffs on other countries and major trading partners.

Trump was swift to criticize Beijing's move. “China played it wrong, they panicked — the one things they cannot afford to do," he wrote in a social media post.

Countries were taking different approaches as they sought a way to deal with the potential disruption to trade and supply chains. Taiwan’s president promised to provide support to industries most vulnerable to the 32% tariffs Trump ordered in his “Liberation Day� reciprocal tariffs announcement.

Vietnam, where the US is a major trade partner, said its deputy prime minister would visit the U.S. for talks on trade.

Some, like the head of the EU's European Commission, have vowed to fight back while promising to improve the rules book for free trade. Others like Britain said they were hoping to negotiate with the Trump administration for relief.

India was hit by a 26% tariff rate, lower than the 34% for Chinese exports and 46% for Vietnam. Its Commerce Ministry that it was “studying the opportunities that may arise due to this new development in U.S. trade policy.� It said talks were underway on a trade agreement, including “deepening supply chain integration.�

The U.S was New Delhi’s biggest trading partner in 2024 with two-way trade estimated at $129 billion, according to U.S. data.

Most U.S. trading partners have emphasized they hope negotiations can help resolve trade friction with Washington. Japanese Prime Minister Shigeru Ishiba said he was prepared to fly to Washington, in a last-ditch effort to forestall the 24% tariffs Trump ordered for exports from the biggest Asian U.S. ally.

Trump hits the links

Trump woke up on Friday morning at Mar-a-Lago, his private club in Palm Beach, and headed to his nearby golf course a few miles away after writing on social media that "THIS IS A GREAT TIME TO GET RICH."

The Republican president was not expected to appear publicly, though he was scheduled to attend a candlelit dinner for MAGA Inc., an allied political organization, Friday evening. He spent Thursday in Miami at a different one of his golf courses, where he attended a Saudi-funded tournament.

Trump often proved impervious to the kind of scandals or gaffes that would damage another politician, but his decision to spend the weekend at his gilded properties could test Americans' patience at a time when their retirement savings are evaporating along with the stock market.

The tariffs are expected to increase prices by thousands of dollars per year and slow economic growth, and there are fears about a potential recession.

However, Trump describes his policies as a painful yet necessary step to encourage companies to relocate their operations to the United States, and he spent the morning defending himself on his social media platform, vowing he is sticking with his policies.

Senate Democratic leader Chuck Schumer of New York called Trump's tariffs "a brutal pincer move with American families trapped in the middle."

Meanwhile, Trump also celebrated a new report showing the U.S. added 228,000 jobs in March, beating expectations. Though the numbers were a snapshot of the economy before the tariff announcement, Trump claimed vindication, saying they already show his moves are working.

"HANG TOUGH," he wrote. "WE CAN'T LOSE!!!"