US stock indices fell sharply on Thursday and extended the heavy losses as a global trade war erupts between the US and most other countries, threatening higher inflation and recession.
US President Donald Trump announced new historic reciprocal tariffs on many countries, that start with a base 10% and rise by many folds depending on the country.
He described the new tariffs as “a declaration of independence” and today as the “liberation day”.
He accused the world of “looting, pillaging, and raping the US for many years” on the economic trade fronts, with barriers being put in front of US companies worldwide.
Trump said the new tariffs are pivotal to bring back wealth to the United States, and he believes the 1929 Great Depression wouldn’t have happened if tariffs were kept.
He called NAFTA one of the worst trade deals ever, and said a single Chinese shipping yard produces more than the entire US production of ships.
He imposed 34% additional tariffs on China, 24% on Japan, 20% on the EU, 46% on Vietnam, 26% on India, 32% on Taiwan, 10% on the UK.
Morgan Stanley analysts now expect the Federal Reserve to refrain from any rate cuts this year as inflation is likely to spike following the new total tariffs.
Earlier US data showed unemployment claims fell by 6 thousand to 219 thousand last week, while analysts expected a rise to 227 thousand.
Otherwise, the ISM services PMI fell to 50.8 in March from 53.5 in February, while analysts expected 53.
Dow Jones slid 4%, or 1679 points to 40,546 points, with a session-low at 40513 points.
S&P 500 tumbled 4.8%, or 274 points to 5396 points, with a session-low at 5390 points.
NASDAQ tumbled 5.9%, or 1050 points to 16550 points, with a session-low at 16,53 points.
