Trump's Tariffs Trigger Market Rout: S&P 500 Plunges 2.7% Amid Dollar Weakness

Markets Expect Trump's Latest China Tariffs to Backfire as Gold Jumps and the Dollar 'Is Not Looking Healthy' Financial markets suffered a sharp decline on Friday, with the S&P 500 plummeting 2.7% in its worst selloff since April 10, after President Donald Trump announced an additional 100% tariff on China and limited U.S. exports of software. Timeline: On Friday, President Trump said he would impose the new tariffs and restrictions, citing China's restriction on rare earths exports. The move was met with immediate market reaction, with the S&P 500 closing down 2.7%, its worst day since April 10. The U.S. dollar index plunged nearly 0.7% as Treasury yields fell, while gold prices surged more than 1.5%. Immediate Impact: Markets are again thinking that the US holds the shorter straw in the tariff fight with China, according to Robin Brooks, a senior fellow at the Brookings Institution. The move is expected to hurt U.S. businesses and consumers, rather than China, which has a stranglehold on rare earths. Background Context: The latest tariffs are part of an ongoing trade war between the US and China, with both countries imposing duties on each other's goods. The conflict has already had significant economic impacts, including a decline in global trade and a rise in inflation. What Happens Next: As markets continue to react to the news, investors are bracing for further volatility. With the U.S. dollar weakening and gold prices rising, it is clear that the tariffs have backfired, at least in terms of market sentiment. The next move will likely be from China, which could respond with its own set of retaliatory measures. Market Analysis: The sudden decline in the S&P 500 and the U.S. dollar index suggests that markets are pricing in a higher risk premium for the US economy. With the trade war showing no signs of abating, investors are increasingly concerned about the economic impact on the US. The surge in gold prices indicates that investors are seeking safe-haven assets as a hedge against potential losses. Economic Impact: The tariffs will likely hurt U.S. businesses and consumers, particularly those in industries reliant on Chinese imports. The restrictions on rare earths exports could also have significant implications for the tech industry, which relies heavily on these materials. *This story is developing. Information compiled from Fortune reporting.*