April 2025 is a month for the history books. The Trump administration has significantly shaken the global market. On 2nd April 2025, President Trump signed an executive order that imposed a 10% minimum tariff on all US imports, effective from April 5th. These aggressive tariffs have caused a lot of economic fears worldwide, and several key trading partners have quickly retaliated with tariffs of their own, triggering an economic crisis and volatility across financial markets around the globe.
‘Liberation Day’ as proclaimed by Donald Trump, was the day on which the executive order for a 10% baseline tariff on all US imports was signed. The only exemptions were pharmaceuticals, semiconductors, and lumber. No country is exempt from this tariff, and certain countries are facing an even greater imposition. For example, China, the United States’ greatest economic rival, currently has a 34% tariff across the board and a whopping 145% tariff on certain products. European Union imports are also facing a 20% tariff. This broad roll-out of tariffs led to a significant stock market crash of a magnitude that hasn’t been seen since the COVID-19 pandemic.
Why the tariffs?
Trump’s 2025 tariff initiatives are driven by a combination of national security concerns, economic strategies, and efforts to address trade imbalances. A key example is the imposition of a 25% tariff on imported automobiles and certain auto parts, justified under Section 232 of the Trade Expansion Act of 1962. The administration claims that excessive imports have weakened the U.S. automotive sector, which is vital for national security, and that the COVID-19 pandemic exposed vulnerabilities in global supply chains. These tariffs aim to improve domestic manufacturing. The administration has implemented tariffs on various sectors, with objectives like reducing the trade deficit, making manufacturing domestic, and addressing national security threats.
In addition, the administration has linked tariffs to efforts in combating illegal immigration and drug trafficking, particularly fentanyl, by pressuring neighboring countries like Mexico and Canada to strengthen their border controls.
Market Volatility
Since the tariffs rolled out, stock markets have become extremely volatile. Within 2 days, the Dow Jones index lost over 4,000 points (9.48%), S&P lost 10%, and Nasdaq lost 11%. Over 6.6 trillion dollars was lost, the greatest two-day loss in history. Oil prices had fallen over 7% and China had retaliated with a 34% tariff on US imports. There was a significant surge in the stock market on April 9th after Trump confirmed a decrease to 10% on all tariffs except those imposed on China, however, by 10th April, the stock market had taken another plunge due to the uncertainty of this 90-day extension. The US stock market lost over $3 trillion in value since investors had become extremely anxious about the potential economic fallout.
On the International level, similar turmoil was seen. Japan’s Nikkei 225 fell by nearly 8%, and European indices such as the FTSE 100, CAC 40, and DAX saw significant declines. The Johannesburg Stock Exchange, the largest in Africa, experienced its greatest decrease of the year, losing more than 9% of its value after Trump ordered tariffs of 30% on South Africa. Prices of products like crude oil, copper, and coffee have been oscillating between rises and falls, showing how volatile the imposition made the global market. The widespread market volatility shows how connected global economies are to one another, and the far-reaching impact of U.S. trade policies.
Possible Economic Consequences
So far, experts have conflicting ideas about the economic repercussions of the tariffs. While some believe this will be good for the US economy, others do not share this sentiment. One projection indicates that tariffs could reduce GDP by approximately 8% and wages by 7%, potentially leading to substantial lifetime financial losses for households. Conversely, another analysis suggests that a global tariff could stimulate economic growth, create jobs, and increase the real income of Americans.
The average American will be significantly affected. In the United States, tariffs are reflected as a consumption tax, leading to higher prices on everyday products such as food, clothing, and household items. Increased annual costs ranging from $1,300 to $5,200, will disproportionately affect low-income households who spend a larger portion of their income on essentials. In addition, since tariffs are higher on basic consumer goods than on luxury items, the average working class and the poor are likely to feel the brunt more.
Economists at Goldman Sachs have lowered their forecast for U.S. economic growth in 2025 to just 0.5% due to the disruptive effects of the trade wars. Similarly, corporate economists predict that the tariffs will greatly increase inflation, with the Consumer Price Index expected to rise by 2.7% over the next year. In Europe, the situation is equally concerning. Goldman Sachs forecasts Eurozone GDP growth at 0.7% for 2025, significantly below the European Central Bank’s projection of 1.1%. Key sectors such as automotive are particularly vulnerable to the new tariffs, and retaliatory measures from the EU could further exacerbate economic challenges.
Poorer countries are not exempt from this. The United Nations Conference on Trade and Development (UNCTAD) has expressed concern over the imposition of steep “reciprocal” tariffs on 28 small economies, many of which contribute very little to the U.S. trade deficit. A 48% tariff on goods from Laos, or 45% on exports from Myanmar aren’t just numbers. They represent a potential destabilization of their fragile economies and may reverse any progress they have made.
In the corporate sector, the uncertainty generated by the tariffs has led to a slowdown in corporate activities. Investment banks report a decline in mergers and acquisitions, with some firms beginning layoffs in response to reduced deal-making.
There have been significant fluctuations in treasury bill yields. Bond prices increased as yields fell, reaching 3.96% at one point, depicting the market’s reaction to economic uncertainty. Companies like Klarna and Chime have paused their IPO plans due to market volatility, reflecting a cautious approach amid the economic uncertainty.
President Trump’s tariff policies in 2025 have introduced significant volatility into the global market. In the end, Trump’s 2025 tariff push might be aimed at boosting American industry, increasing national security, and asserting global trade dominance. But it’s coming at a steep cost, especially for everyday people and struggling nations. While the “America First” political message is clear, the economic ripple effects are global and deeply human. Is it worth it then?
