Asian stocks slide after Wall Street surrenders to hit by Trump’s tariffs

It’s “plausible” the tariffs altogether, which would rival levels unseen in more than a century, could knock down US economic growth by 2 percentage points this year and raise inflation close to 5%, according to UBS. That’s such a big hit it “makes one’s rational mind regard the possibility of them sticking as low,” according to Bhanu Baweja and other strategists at UBS.

Trump has previously said tariffs could cause “a little disturbance” in the economy and markets. On Thursday he downplayed the impact. “The markets are going to boom, the stock is going to boom and the country is going to boom,” Trump said as he left the White House to fly to Florida.

The S&P 500 sank 4.8% to 5,396.52 and the Dow Jones Industrial Average dropped 4% to 40,545.93. The Nasdaq composite tumbled 6% to 16,550.61.

Some of the worst hits walloped smaller US companies, and the Russell 2000 index of smaller stocks dropped 6.6% to pull more than 20% below its record.

Four of every five that make up the S&P 500 declined.

Best Buy fell 17.8% because the electronics that it sells are made all over the world. United Airlines lost 15.6% because customers worried about the global economy may not fly as much for business or feel comfortable enough to take vacations. Target tumbled 10.9% amid worries that its customers, already squeezed by still-high inflation, may be under even more stress.

Investors knew Trump was going to announce sweeping new tariffs, and fears surrounding it had already pulled Wall Street’s main measure of health, the S&P 500 index, 10% below its all-time high.

Some analysts and investors believed Trump might use tariffs simply as a tool for negotiations, rather than as a long-term policy. But he indicated Wednesday that he sees them as a way to bring factory jobs back to the United States, which could take years.

The Federal Reserve could cut interest rates to support the economy, but lower rates can push up inflation, already a worry given that US households are bracing for sharp increases to their bills due to the tariffs.

Yields on Treasurys tumbled in part on rising expectations for coming cuts to rates, along with general fear about the health of the US economy. The yield on the 10-year Treasury fell to 4.04% from 4.20% late Wednesday and from roughly 4.80% in January.

A report Thursday said fewer US workers applied for unemployment benefits last week, better than economists were expecting. A separate report said activity for US transportation, finance and other businesses in the services industry grew last month, but by less than forecast.

Also early Friday, US benchmark crude oil shed 70 cents to $66.25 a barrel. Brent crude, the international standard, was down 64 cents at $69.50 a barrel.