The S&P 500 index sank 3.95% after US President Donald Trump enacted tariffs above 10% on all imported products.
This opening would mark the index's worst day since the 2022 inflation crisis, CNN reported.
US media reported that Dow futures dropped 3.6%, or 1,500 points. Nasdaq fell to 4.9% at open.
'Recipe for stagflation'
Wall Street executives said the immediate effects of the tariffs potentially created one of the worst days for the stock market in recent years.
“President Trump just finished his tariff speech at the White House, and we would characterize this slate of tariffs as ‘worse than the worst case scenario’ the Street was fearing,” said Senior Analyst at Wedbush Securities Dan Ives, as reported by CNN.
“The silver lining for investors could be that this is only a starting point for negotiations with other countries and ultimately tariff rates will come down across the board — but for now traders are shooting first and asking questions later,” Chris Zaccarelli, chief investment officer at Northlight Asset Management, told CNN.
“Trump just threw a match on an explosive tinder pile of already weakened inflation concerns,” said former US Treasury economist David Beckworth, as reported by NBC. “These new tariffs are a perfect recipe for stagflation and a lost midterm elections.”
Top economic analysts said that the tariffs could lead to recessions around the world.
“This is a game changer, not only for the US economy but for the global economy,” said Fitch Rating's head of US economic research Olu Sonola, as reported by NBC.
“Many countries will likely end up in a recession. You can throw most forecasts out the door if this tariff rate stays on for an extended period of time."
She told NBC that the tariff levels Trump enacted were unseen since 1910.
White House responds
White House press secretary Karoline Leavitt told reporters that Wall Street investors needed to trust Trump's vision for the US economy.
“To anyone on Wall Street this morning, I would say trust in President Trump,” Leavitt said during a press briefing. “This is a president who is doubling down on his proven economic formula from his first term.
“This is a common-sense policy. And if these countries wanted to negotiate, if these countries wanted to do what’s right, they’ve had 70 years to do it,” the press secretary added. “Instead, they have been ripping off American workers. And President Trump has made it very clear that this is a policy he was going to implement.”
Leavitt added that Trump would not be scaling back tariffs before they take effect this weekend.
“The president made it clear yesterday this is not a negotiation. This is a national emergency. He’s always willing to pick up the phone to answer calls, but he laid out the case yesterday for why we are doing this.”
The press secretary responded to reporters' questions regarding the economic challenges for American citizens that Trump warned of when he announced the tariffs.
“We’re working on that every single day," she said. "The American people and the naysayers need to look at the whole of government economic approach that this administration is taking."
US Vice President JD Vance also emphasized that the US administration would be taking steps to lessen the economic strains Americans will be facing.
“I grew up in a family that often did live paycheck to paycheck, and we know a lot of Americans are worried, so we are fighting very hard to bring prices down,” Vance said in an interview on Fox and Friends.
“Right now, President Trump is taking this economy in a different direction. He ran on that. He promised it, and now he’s delivering.
“Yes, this is a big change. I’m not going to shy away from it, but we needed a big change.”