Trump’s Reciprocal Tariff Policy Takes Effect on April 9, Triggering Global Market Turmoil

On April 9, 2025, U.S. President Donald Trump’s reciprocal tariff policy officially went into effect, raising U.S. import duties to 22%—the highest level since 1910. However, markets had already sounded the alarm by April 7, with a sharp sell-off rippling across global equities and cryptocurrencies as investor fears over the tariff’s impact intensified. With the policy now in place, financial markets worldwide are bracing for heightened volatility and a stern test of the global economic system.

Data from April 7 revealed the scale of the initial shock. Asian markets bore the brunt early, with Japan’s Nikkei 225 plunging over 8%, officially entering bear market territory after falling more than 20% from its December peak. South Korea’s Kospi dropped 7%, Singapore’s benchmark slid 9%, and Taiwan’s tech-heavy index cratered 9.7%, marking its largest single-day decline on record. India’s key indices fell 5%, their worst performance since early June, while Hong Kong’s Hang Seng Index closed down 13.2%, its steepest drop since 1997.

In China, the CSI Index shed 7% amid mounting anxiety over the looming U.S. tariffs. Beijing signaled it might roll out stimulus measures ahead of schedule to cushion the blow, but investor confidence has taken a clear hit. The MSCI Asia Pacific Index posted its sharpest decline since 2008, while Asian credit default swaps widened to levels unseen since March 2020, signaling a surge in corporate debt risk.

Europe wasn’t spared. Germany’s DAX tumbled over 10% at the open before paring losses to 7% by close, the Stoxx 600 fell more than 5%, and the FTSE 100 declined 5%. In the U.S., pre-market trading pointed to a rough day ahead: S&P 500 futures dropped 3.5%, Nasdaq 100 futures fell 4%, and Russell 2000 futures declined 4.3%. The S&P 500 sits on the cusp of a bear market, with the VIX fear gauge spiking above 50—its highest since April 2020.

Tech giants led the pre-market slide, with Apple, Microsoft, Google, Meta, and Amazon each down 5%, Nvidia off 6%, and Tesla shedding 8%. Crypto-related stocks fared worse: Coinbase (COIN) slumped 11%, and MicroStrategy (MSTR) cratered 12%. Oil prices fell 5% to a four-year low, amplifying concerns over weakening global demand.

Goldman Sachs downgraded its 2025 U.S. GDP forecast on April 7, cutting it from 1% to 0.5% and cautioning of rising recession risks. Traders now expect the Federal Reserve to cut rates five more times this year to counter tariff fallout.

The crypto market mirrored the chaos. Bitcoin (BTC) dipped below $76,000, down over 8% in 24 hours, while Ethereum (ETH) fell below $1,500, losing nearly 10%. The sharp declines in Coinbase and MicroStrategy shares underscored a bleak near-term outlook for the sector.

Trump’s tariff hike has sparked a global response. China announced a 34% tariff on U.S. goods, with Japan, South Korea, and the EU mulling retaliatory measures. Economists warn that a full-blown trade war could disrupt supply chains and drive up inflation, with April 7’s market reaction serving as an early indicator.

For the crypto industry, Coinbase’s 11% drop and Bitcoin’s downward trajectory suggest sustained short-term pressure. However, aggressive Fed rate cuts and a weaker dollar could offer a potential lifeline for digital assets in the months ahead.

The market turbulence on April 7 highlighted the disruptive potential of Trump's tariffs, while the implementation on April 9 marks the beginning of a critical period. From global equities to cryptocurrencies, no corner of the financial world seems immune to this upheaval. In navigating this uncertain landscape, investors must closely monitor ongoing policy developments and their evolving impact on capital markets.