Stocks are reeling this Thursday as Wall Street digests the escalation in the U.S.-China trade conflict. The sharp sell-off comes just one day after markets logged their strongest single-day rally in decades, spurred by a temporary pause on U.S. tariffs against several trading partners. That optimism died after the White House confirmed that tariffs on Chinese imports have risen to a staggering 145%.
The S&P 500 fell over 5%, while the Nasdaq Composite dropped nearly 6%, marking one of the tech index’s worst days. The Dow Jones Industrial Average collapsed by more than 1,700 points, or 4.5%, as investor anxiety grew. The 10-year Treasury yield also declined, landing near 4.37%, a sign of increased demand for safe-haven assets.
Market Movers:
- Meta Platforms (META): Shares sank over 6% amid broader tech weakness and concerns about its exposure to Chinese advertising markets. The company is also reportedly continuing its quiet round of workforce reductions, signaling a more cautious approach to headcount amid AI-driven efficiency pushes. Investors fear ongoing tariff escalations may further erode demand for digital advertising globally.
- Walmart (WMT): Shares fell 4% after analysts flagged the retailer as particularly exposed to the inflationary effects of Trump's sweeping new China tariffs. While the company has a robust domestic supply chain, it relies heavily on Chinese imports for many of its low-cost consumer goods. Tariff pressures could either cut into profit margins or force price hikes that alienate budget-conscious shoppers.
- Delta Air Lines (DAL): The stock dropped 5.3% after withdrawing its full-year forecast, citing uncertainty from escalating trade tensions. The airline had rallied earlier in the week, but concerns around reduced global demand—particularly from China—prompted a sharp reversal. Fuel cost volatility tied to plunging oil prices added to the pressure.
- Apple (AAPL): Shares slid more than 7% as fears grew that the company could become a key target in China’s retaliatory measures. With a sizable portion of its production tied to Chinese factories and a growing customer base in the country, Apple is uniquely vulnerable in a bilateral trade conflict. Analysts also worry that higher import duties on components could squeeze its margins in future quarters.
- ExxonMobil (XOM): ExxonMobil declined nearly 5% as oil prices plunged, dragged down by concerns that the US-China trade war will significantly weaken global demand. China, a major crude importer, is expected to slash energy purchases in response to the US tariff barrage. The reversal erased much of the oil sector's rally from Wednesday’s brief tariff pause.
A Rally Erased in Record Time
Wednesday's historic relief rally has been completely erased in under 24 hours. Markets were relieved that President Trump paused tariff hikes on countries like Germany and Japan. But the relief was short lived when the administration revealed that China would face harsher penalties than previously disclosed, triggering fears of retaliation and economic slowdown.
Every sector on the S&P 500 was deep in the red Thursday, with Energy, Technology, and Consumer Discretionary leading declines. Analysts at Rabobank warned that “we could again be seeing escalation and de-escalation at the same time,” with markets pulled in opposite directions by shifting policy headlines.
Tariffs, Inflation, and Corporate Strategy
While March’s CPI report showed some easing in inflation—consumer prices rose just 2.5% year-over-year, below expectations. Inflation may be cooling, but so is growth, and tariff shocks threaten to derail corporate earnings forecasts.
Companies are already adjusting. Several major firms, including Delta and Walmart, have either lowered or withdrawn earnings guidance. This may be the beginning of a broader trend, as businesses use tariff volatility as a pretext to reset expectations or restructure. AI adoption and workforce downsizing—trends accelerated during the pandemic—may now be reinvigorated under the guise of trade war fallout.
Looking Ahead
Investors will continue watching the White House for further developments in the tariff standoff, particularly any response from China. Analysts warn that retaliatory measures—like the 84% tariff China imposed on U.S. goods—could deepen the economic rift and trigger a global slowdown.
Markets will also be closely tracking next week's retail sales and earnings reports from major companies. With volatility spiking and confidence shaken, Wall Street may be bracing for a longer period of instability—and hoping that diplomacy, not escalation, wins out in the days ahead.
