The Dow Jones had dropped by 800 points by 4pm Tuesday.
Three major US stock indices opened high on Tuesday. Trump administration officials have shown that negotiations were underway between the US and other countries over tariffs, but the market plunged as the day progressed.
As of Tuesday afternoon, the Dow Jones industrial average had dropped about 800 points, while the Nasdaq composites had slid 3 percentage points, and the S&P 500 had dropped by more than 2%.
Over the last two-day period, we have brought the S&P 500 closer to Bear Market territory, comparable to the speed and strength of the drawdown seen on the 2020 Covid-19 Swoon and the speed and strength of the drawdown seen on the 2008 financial crisis slide.
After Monday’s wild swing, the S&P 500 fell just 0.2%. The CBOE Volatility Index (VIX), or Wall Street’s “Fear Gauge,” registered the highest closure level in five years.
Treasury Secretary Scott Bescent said Japan is leading the way, as he said more than 70 countries have contacted the White House over tariff negotiations.
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“If they come to the table with solid suggestions, I think we can end up with some good deals.”
Bescent said the Chinese administration’s recent announcement to increase US tariffs was a “big mistake.”
Chinese officials said last week that the administration would impose a 34% increase in tariffs on US goods after President Donald Trump announced his initial 54% obligation on China’s imports. China’s Commerce Department then doubled its statement, indicating that it would “fight to the end” and that it would take action against the United States.
“I think this China escalation was a big mistake because they’re playing together,” Bescent said.
“What will we lose from China’s tariffs that raise tariffs on us? We’re exporting a fifth to them about what they export to us, so that’s a lost move for them.”
The Trump administration says tariffs are designed to strengthen national security around the supply line and to encourage job creation within the United States. White House officials also framed tariffs as a way to allow the United States to reduce imbalances with its major trading partners, which have long imposed US import duties.
Trump is in addition to collecting tariffs in Europe and other countries that actively trade with the US and Europe, which issued 10% baseline tariffs in most countries around the world. It is subject to tariffs of 30% or more, including China, Vietnam, Taiwan and several Southeast Asian countries.
Reuters contributed to this report.
