U.S. stock markets plunged to their worst levels in years on Friday, closing out a chaotic week dominated by fears of a deepening trade war and economic slowdown. The Dow Jones Industrial Average plummeted 2,231 points, the S&P 500 suffered its steepest single-day fall in over four years, and the Nasdaq officially slid into bear market territory.
The dramatic sell-off was fueled by President Trump’s surprise decision to impose sweeping new tariffs—10% across all U.S. imports, along with steep “reciprocal” levies targeting nearly 90 countries. The move shocked investors and rattled economists, who scrambled to revise down growth projections for the remainder of 2025.
Federal Reserve Chair Jerome Powell acknowledged the market’s growing concern, stating Friday, “The tariff increases are now clearly larger than previously anticipated. The economic impact, including rising inflation and reduced growth, is becoming more evident.” 
The S&P 500 dropped 322 points, or nearly 6%, closing at 5,074—its worst performance since the early pandemic era in March 2020. The Dow Jones lost 5.5%, down 14% from its February peak. Meanwhile, the Nasdaq Composite tumbled 963 points, or 5.8%, officially entering a bear market with tech giants leading the retreat. Collectively, U.S. markets erased $2.7 trillion in value in a matter of hours.
Technology stocks were hit hardest, as fears grew that the tariffs—alongside Beijing’s retaliatory measures—would stifle innovation and disrupt global supply chains. China responded with its own 34% blanket tariff on all U.S. goods and a new round of export restrictions on rare earth materials vital to American tech manufacturers. Additionally, it announced trade sanctions on 27 more U.S. companies, deepening investor concerns about long-term damage to the tech sector.
“This could set the U.S. tech industry back by a decade,” warned Dan Ives of Wedbush Securities. “China is not just retaliating—they’re aiming to take the lead.”
Global markets followed Wall Street into the red. Japan’s Nikkei dropped 2.8%, Germany’s DAX fell 2%, and the UK’s FTSE 100 slid nearly 1.7%. Analysts warned of further contagion if tensions escalate.
Adding to market volatility, a surprisingly strong U.S. jobs report failed to calm fears. The economy added 228,000 jobs in March, yet the unemployment rate ticked up to 4.2%. Economists say the data doesn’t yet reflect the economic strain that tariffs will bring over the next several months.
The Federal Reserve is now under pressure to shift policy, with traders betting on multiple rate cuts before year-end. UBS and other major institutions have slashed their U.S. growth forecasts to below 1%, citing falling consumer confidence and reduced business investment as tariffs raise input costs.
“The average American family could see costs rise by nearly $2,000 this year due to these tariffs,” noted the nonpartisan Tax Foundation. Items like electronics, appliances, clothing, and groceries are all expected to become more expensive as companies pass on higher costs to consumers.
Solita Marcelli of UBS warned clients, “Unless the U.S. pulls back on tariffs, we’re staring down a real risk of recession.”
Despite the White House’s hardline stance, markets are hoping for a return to negotiations. But Trump doubled down on Friday, writing on Truth Social: “We’re done playing nice. America will win this trade war.”
As markets brace for more turbulence, one thing is clear: the tariff war has morphed into a full-blown economic crisis that could define the financial landscape for months, if not years, to come.
