US markets plunge as White House confirms 145% China tariffs, dollar weakens

_{This article was developed in collaboration between IG's editorial team and AI technology}

How will escalating China tariffs impact US markets after Thursday's plunge?

Wall Street indices tumble as the White House confirms 145% tariffs on Chinese imports, reversing Wednesday's historic rally and intensifying concerns about economic repercussions.

The US 500 trades 188 points (3.46%) lower at 5268.05 as of 4:50pm (EDT).

US markets plunged on Thursday as the White House confirmed China will be hit with 145% tariffs, significantly higher than the 125% rate President Trump initially announced the previous day. This revelation triggered a broad sell-off, with the US 500 falling 3.46%, the US Tech 100 tumbling 4.31%, and Wall Street dropping 1,014 points (2.5%).

Tariff details create market whiplash

The market's sharp reversal comes less than 24 hours after Wall Street posted its biggest gain since 2001, when President Trump announced a 90-day pause on his most aggressive reciprocal tariffs and lowered country-specific levies to a baseline 10% for almost every nation except China.

Thursday's clarification that the total tariff on Chinese imports "effectively totals 145%" — including a previously imposed 20% fentanyl-related tariff — caught investors off guard and intensified concerns about economic repercussions.

Dollar plummets amid economic uncertainty

The US dollar sank by 1.1% against the pound, marking its most significant drop since 2022. This decline reflects growing concerns about the impact of trade tensions on the US economy, with investors increasingly questioning America's reliability as a trading partner.

Wall Street giant Jefferies indicated it was increasing investments in Europe while pulling back from the US, illustrating the shifting sentiment among major institutional investors.

Inflation data overshadowed by tariff concerns

Despite positive news that "core" inflation increased just 2.8% in March — the lowest annual increase in four years and below Wall Street's forecast of 3% — markets continued their downward trajectory. Typically, better-than-expected inflation readings lead to market rallies, but tariff concerns overshadowed this favorable economic data.

Sector and stock performance

Tech stocks, which led Wednesday's rally, experienced the steepest declines:

• Nvidia fell 5.91% after soaring 18% the previous day
• Tesla dropped 7.3% following a 20% gain on Wednesday
• Major semiconductor and tech hardware companies faced similar reversals

Investor sentiment deteriorates

Bloomberg reported that leveraged loan funds have seen record outflows, indicating growing investor apprehension about holding US equities amid the volatile market environment. The Yale Budget Lab now estimates the US effective tariff rate at 27%, the highest level in more than a century.

JPMorgan Chase maintained its forecast of a 60% chance of a US and global recession, signaling that Wednesday's policy adjustment has not meaningfully altered the outlook for economic growth.

White House perspective and timeline

President Trump acknowledged there will be "transition problems" from his tariffs but maintained that "in the end, it's going to be a beautiful thing." He also suggested that a trade deal could soon be struck with China, despite the new 145% tariff, stating: "I think that we'll end up working on something that's very good for both countries."

However, White House adviser Kevin Hassett indicated that the 10% baseline tariffs on other countries are "here to stay," noting it would "take some kind of extraordinary deal for the president to go below there."

Technical analysis and market outlook

The extreme volatility has created significant technical damage to major indices. The US 500 has seen six consecutive sessions of extreme volatility, moving at a range of more than 5% back and forth.

The 10-year Treasury yield ended Thursday flat around 4.39%, after experiencing significant whiplash in recent sessions. Bond market panic has largely abated, but equity markets remain highly sensitive to tariff headlines.

Looking ahead, Friday's Producer Price Index release and the start of first-quarter earnings season with major banks reporting results will provide further insights into the economic impact of recent events. Bank earnings will be closely scrutinized for signs of consumer stress amid the tariff turmoil.