U.S. financial markets took a sharp downturn on Monday after President Donald Trump announced a new wave of tariffs on several key international partners, igniting fears of a renewed global trade war. The move sent stocks tumbling and rattled investors already wary of geopolitical uncertainty.
The Dow Jones Industrial Average closed down 422 points, or 0.94%, while the S&P 500 fell 0.79% and the Nasdaq Composite dropped 0.92%. All three major indexes recorded their steepest daily declines in nearly three weeks.
The market reaction followed Trump’s midday announcement imposing 25% tariffs on imports from Japan and South Korea, with additional levies—ranging from 25% to as high as 40%—targeting countries such as Malaysia, Myanmar, Laos, Kazakhstan, and South Africa. The tariffs are slated to take effect on August 1.
In a series of published letters, the president made clear that tariff rates could change depending on the progress of trade negotiations, leaving open the door to both increases and decreases. The White House also indicated it would extend the original tariff decision deadline from July 9 to August 1 to allow time for further talks.
The market responded swiftly. Shares in major Japanese automakers traded in the U.S. fell sharply—Nissan dropped 7.16%, Toyota fell 4%, and Honda lost 3.86%. South Korean tech firms were hit even harder, with LG Display tumbling 8.3% and SK Telecom dropping 7.76%. Exchange-traded funds (ETFs) focused on Japanese, Korean, Malaysian, and South African equities also took a beating, each posting their worst single-day losses since early April.
Ross Mayfield, an investment strategist at Baird, attributed the sell-off to the unexpectedly high tariff rates. “Markets were not pricing in such aggressive moves,” he noted, highlighting the volatility that often follows policy announcements of this scale.
The ripple effects were felt across asset classes. U.S. Treasury yields rose as prices dropped—the 10-year yield climbed to 4.39%, and the 30-year yield hit 4.92%. Meanwhile, the dollar strengthened against several foreign currencies, including the yen, won, and rand, while the CBOE Volatility Index—Wall Street’s so-called fear gauge—spiked 8.4%. Gold prices initially dipped but ended the day slightly higher.
