[New York Stock Market] Trump Enforces '104% Tariff on China,' Market Turns Down... Nasdaq Down 2.2%

White House Reaffirms "104% Tariff on China Starting the 9th"
Panic Selling Erupts Amid Fears of U.S.-China Trade War
Market Swings Wildly on Hopes and Fears Over Tariff Talks
Apple, "iPhones Made in China," Plunges 22% in Four Days

The three major indices of the U.S. New York stock market all closed sharply lower on the 8th (local time), a day before the implementation of reciprocal tariffs by U.S. President Donald Trump. As the White House reaffirmed its plan to impose a total of 104% additional tariffs as retaliation against China’s counter-tariffs, concerns over the U.S.-China trade war spread, triggering a flood of sell orders. The market continued its extreme rollercoaster pattern of sharp rises and falls, as investors speculated on the possibility of both agreement and breakdown in tariff negotiations between the U.S. and other countries.

Reuters Yonhap News

On this day in the New York stock market, the Dow Jones Industrial Average (Dow) focused on blue-chip stocks closed at 37,645.59, down 320.01 points (0.84%) from the previous trading day. The S&P 500, centered on large-cap stocks, fell 79.48 points (1.57%) to 4,982.77, and the tech-heavy Nasdaq dropped 335.35 points (2.15%) to 15,267.91.

Major indices surged about 4% in the morning on tariff negotiation hopes but plunged vertically after the U.S. reiterated its stance to impose an additional 50% tariff on China in response to China’s reciprocal tariffs. White House spokesperson Caroline Levitt said in a briefing that the 50% additional tariffs on China would take effect at 12:01 a.m. on the 9th. She explained, "China’s retaliation is a mistake, and the U.S. responds more strongly when hit," adding, "That is why a total of 104% tariffs will be implemented." Earlier, President Trump had imposed two rounds of 10% additional tariffs on China after his inauguration on January 20, and announced that from the 9th, a 34% reciprocal tariff would be applied to China. When China retaliated with tariffs at the same level, Trump threatened on the previous day to impose an additional 50% tariff as a counter-retaliation. If the U.S. warning materializes, the cumulative additional tariffs on China will reach 104% during Trump’s second term starting from the 9th.

In the morning, the market had shown a rebound on hopes for tariff negotiations. President Trump posted on his social media platform Truth Social that he had a "good call" with Acting President and Prime Minister Han Duck-soo and said "the situation looks good," spreading optimism about tariff talks. Both sides broadly discussed tariffs, shipbuilding, U.S. energy purchases, and defense cost-sharing (costs for U.S. troops stationed in South Korea). He also left room for negotiation with China, saying, "We are waiting for their call." However, investor sentiment sharply contracted after the announcement of imposing a 104% additional tariff on China. China also expressed firm opposition to the U.S. threat of a 50% additional tariff, signaling no intention to yield, further heightening tensions in the U.S.-China tariff war.

On Wall Street, concerns are spreading that the U.S.’s extreme tariff policies and uncertainties could trigger a recession, and that the stock market may face further corrections.

Scott Radner, CIO of Horizon Investments, diagnosed, "The fundamental reason for the decline is policy uncertainty," adding, "It is impossible to technically bottom out until the fundamental issues are resolved or at least the direction becomes clear."

Robert Lugirello, Chief Investment Officer (CIO) of Brave Eagle Wealth Management, said, "There was a rise on Tuesday (8th) due to optimistic prospects for tariff negotiations, but investors want trade policies to stabilize," adding, "Companies need sustainability to make long-term capital allocation decisions, and confidence in consistent policies is also necessary."

By stock, Apple, which produces the most iPhones in China and is expected to be hit directly by the increase in tariffs on China, plunged 4.68%. Apple’s stock price has fallen 22% over the past four trading days, marking the largest drop since 2008. U.S. electric vehicle maker Tesla fell 4.9%, while Nvidia and Meta, the parent company of Facebook, dropped 1.16% and 1.12%, respectively.

Bond yields rose mainly in long-term bonds. The 10-year U.S. Treasury yield, a global bond yield benchmark, rose 12 basis points (bp) (1bp = 0.01 percentage points) to 4.28% from the previous trading day, while the 2-year U.S. Treasury yield, sensitive to monetary policy, fell 2bp to 3.71%.

The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as the "fear index" of Wall Street, surged 16.99% from the previous day to 54.96.