Sell-off worsens worldwide and Dow drops 2,200 after China retaliates against Trump tariffs

NEW YORK (AP) - NEW YORK (AP) - The worldwide sell-off for financial markets slammed into a higher, scarier gear. The S&P 500 plummeted 6% Friday, the Dow Jones Industrial Average plunged 5.5% and the Nasdaq composite dropped 5.8%.

Markets are facing their worst crisis since the COVID crash after China matched President Donald Trump's big raise in tariffs in an escalating trade war. Not even a better-than-expected report on the U.S. job market was enough to stop the slide. The price of oil slid to its lowest level since 2001.

So far there are few, if any, winners in financial markets from the trade war. European stocks saw some of the day's biggest losses, with indexes sinking more than 4%. 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.

Stocks begin Q2 with skid

The S&P 500 followed its biggest quarterly loss in nearly three years with a drop in the first week of April. The index hit a record on Feb. 19 but has since tumbled on fears the Trump administration’s tariff-centered trade policies could spark inflation and slow 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 by imposing a 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.

The AP's Seth Sutel reports global stocks worsen after China retaliates against U.S. tariffs.

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 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 roughly 16% from its record set in February.

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

Much will depend on how long Trump's tariffs stick and what kind of retaliations other countries deliver. Some of Wall Street is holding onto hope that Trump will lower the tariffs after prying out some "wins" from other countries following negotiations. Otherwise, many say a recession looks likely.

Trump has said Americans may feel "some pain" because of tariffs, but he has also said the long-term goals, including getting more manufacturing jobs back to the United States, are worth it. On Thursday, he likened the situation to a medical operation, where the U.S. economy is the patient.

"For investors looking at their portfolios, it could have felt like an operation performed without anesthesia," said Brian Jacobsen, chief economist at Annex Wealth Management.

But Jacobsen also said the next surprise for investors could be how quickly tariffs get negotiated down. "The speed of recovery will depend on how, and how quickly, officials negotiate," he said.

Trump slaps tariffs on trading partners

President Donald Trump placed elevated tariff rates on dozens of nations that run trade surpluses with the United States, while imposing a 10% baseline tax on imports.

List of trading partners and tariffs put out by the White House:

Vietnam said its deputy prime minister would visit the U.S. for talks on trade, while the head of the European Commission has vowed to fight back. Others have said they were hoping to negotiate with the Trump administration for relief.

Trump criticized China's retaliation on Friday, saying on his Truth Social platform that "CHINA PLAYED IT WRONG, THEY PANICKED – THE ONE THING THEY CANNOT AFFORD TO DO!"

On Wall Street, stocks of companies that do lots of business in China fell to some of the sharpest losses.

DuPont dropped 11.2% after China said its regulators are launching an anti-trust investigation into DuPont China group, a subsidiary of the chemical giant. It's one of several measures targeting American companies and in retaliation for the U.S. tariffs.

GE Healthcare got 12.3% of its revenue last year from the China region, and it fell 12.7%.

In the bond market, Treasury yields continued their sharp drop as worries rise about the strength of the U.S. economy. The yield on the 10-year Treasury tumbled to 3.95% from 4.06% late Thursday and from roughly 4.80% early this year. That's a major move for the bond market.

The Federal Reserve could cut its main interest rate to relax the pressure on the economy, as it was doing late last year before pausing in 2025. But it may have less freedom to move than it would like.

Fed Chair Jerome Powell said in written remarks being delivered in Arlington, Virginia that tariffs could also drive up expectations for inflation. That could be even more damaging than high inflation itself, because it can drive behavior that begins a vicious cycle that only worsens inflation. U.S. households have already said they're bracing for sharp increases to their bills.

"Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem," Powell said.

That could indicate a hesitance to cut rates because lower rates can give inflation more fuel.

In stock markets abroad, Germany's DAX lost 5%, France's CAC 40 dropped 4.3% and Japan's Nikkei 225 fell 2.8%.