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The major stock markets around the world plummeted on Monday, April 7, as a direct consequence of the wave of global tariffs imposed by the President of the United States, Donald Trump, unleashing fears of a major economic recession.
From Asia to Europe, markets reacted with sharp losses, according to DW. The Japanese Nikkei fell by 7.8%, the Hang Seng in Hong Kong plummeted by 13.2%, its largest drop since the financial crisis of 2008. In Seoul, the decline was 5.6%, while in Sydney, it reached 4.2%.
In Europe, the major stock markets also started the week in the red: Frankfurt dropped 7.86%, Paris fell 6.19%, London retreated 5.83%, Madrid decreased 3.6%, and Milan lost 2.32%.
Reaction on Wall Street: another day in the red
The New York Stock Exchange opened with heavy losses: the Dow Jones plummeted more than 1,300 points (-3.77%), the S&P 500 fell by 3.94%, and the Nasdaq dropped by 4.17%, reaching 14,938 points, which is already considered bearish territory, according to the agency EFE.
Although there was a brief uptick driven by a debunked rumor about a possible 90-day pause on tariffs, the markets quickly resumed their declines after it was confirmed that the information was false.
Trump unleashes a tariff storm
The panic in the markets was triggered by the enactment of a universal 10% tax on all imports to the U.S., announced last week by Trump. Starting Wednesday, the tariffs will rise to 20% for European products and 34% for those from China.
China immediately responded with tariffs of 34% on U.S. goods and restrictions on the export of key rare minerals, such as gadolinium and yttrium, used in medical and electronic technology.
"Sometimes you have to take the medicine to fix something," Trump said from Air Force One, making it clear that he will not back down without a reduction in the U.S. trade deficits.
Widespread collapse: banks, energy companies, and tech firms
The losses affected all sectors: from large tech companies like Alibaba (-17%) and JD.com (-14%) to banks, automotive, and energy companies. In the Ibex 35, firms such as Cellnex (-7%), Naturgy, Enagás, and Sabadell fell by over 5%, while BBVA and Santander also experienced significant declines.
Oil and copper prices also decreasing
The price of Brent crude oil fell by 2%, reaching $63.5 per barrel, its lowest level since April 2021, accumulating a loss of 16% in just five days. Copper, essential for clean technologies, also extended its losses due to the expected decline in global demand.
Economists warn about the risk of recession
Analysts agree that only a rectification by the U.S. government, suspending tariffs and opening a real channel for negotiation with its trade partners, could stem the bleeding in the markets, something Trump denies.
However, judging by the statements of the president and his inner circle, that scenario is still a long way off.
Frequently Asked Questions about the Stock Market Decline and the Tariff War between the U.S. and China
Why did global markets fall on April 7, 2025?
The markets fell due to the imposition of global tariffs by U.S. President Donald Trump. This measure sparked fears of a widespread economic recession, negatively impacting markets from Asia to Europe.
How does the trade war between the U.S. and China affect the global economy?
The trade war has generated tensions in global commerce and increased the risk of an economic recession. China has responded to U.S. tariffs with similar measures, impacting key sectors such as technology, energy, and automotive, and creating uncertainty in global financial markets.
What are the tariff measures imposed by Donald Trump?
Trump has imposed a universal 10% tax on all imports to the U.S., with higher tariffs for European and Chinese products. The tariffs reach 20% for European products and 34% for those coming from China.
What economic sectors have been most affected by Trump's tariffs?
The most affected sectors include technology, automotive, energy, and banking. Companies like Alibaba and JD.com, as well as banks and energy companies, have experienced significant losses due to the economic uncertainty caused by tariffs.
What consequences could Trump's tariffs have on American consumers?
American consumers could face an average increase of more than $2,100 annually in their expenses due to tariffs. This is because tariffs, although imposed on importers, are often passed on to the end consumer, which could make everyday products more expensive.
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