President Donald Trump touted Wednesday as a landmark in US history, saying his onslaught of tariffs against much of the world would “make America wealthy again.” Instead, the announcement of the steepest levies in a century sparked a rapid selloff in risk assets, culminating Thursday with a 4.8% rout in the S&P 500. 

Wall Street economists said the tariff maelstrom set off by Trump has escalated the already-growing risk of a US recession this year. Meanwhile inflation, which like the economy in general was closing in on a soft landing when he took office, could spike to pandemic levels. Trump, 78, who was elected by a margin of 1.5% in the popular vote, had promised he would speed the decline in consumer prices. A new Reuters poll show’s his approval rating sinking to 43%.

Supporting evidence for the dark economic outlook could arguably be seen in the US stock market, which saw calamitous drops across the board. The market as a whole is down almost 10% since Trump took office, marking the worst 10-week start under a new president in 24 years (the last one was under then-President George W. Bush during the dot-com selloff). The S&P 500 Index is virtually in a correction over the 52 trading sessions since Inauguration Day. 

Bruce Kasman, JPMorgan’s chief economist and head of global economic research, said if the tariffs go ahead as announced, they’ll likely push the US and the world economy into recession this year. Playing off of “Liberation Day,” Trump’s name for Wednesday, Neil Dutta, head of US economic research at Renaissance Macro Research, instead dubbed it “Obliteration Day.” Here’s your markets wrap. —David E. Rovella

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As much of the world lines up against the US, the European Union seems to be leading the way. French President Emmanuel Macron urged companies to pause investments following Trump’s tariffs on the EU and other regions. It makes little sense, Macron said, for EU firms to invest there while the US punishes them. “What would the message be of having big European players that invest billions in the American economy at the same time they are hitting us?” Macron asked. 

Indeed, Macron said the EU shouldn’t shy away from a strong response to US tariffs. He suggested the possibility of using the EU’s anti-coercion tool and hitting US digital services as well as “financing mechanisms for the American economy.” The EU’s anti-coercion measure is its most powerful trade tool, designed to strike back against nations that use trade and economic measures coercively.

Macron insisted that any EU response should be coordinated at the bloc level, adding he had spoken with EU Commission chief Ursula von der Leyen earlier Thursday. EU powerhouse Germany was none-too-pleased, either, with one official comparing Trump’s economic assault to Vladimir Putin’s war on Ukraine. “Last night’s decision is comparable to the war of aggression against Ukraine,” the outgoing German vice chancellor, Robert Habeck, told reporters in Berlin Thursday. “The magnitude and determination of the response must be commensurate.”

Emmanuel Macron Photographer: Nicolas Economou/Getty Images

While Trump’s tariffs are the big reason your 401(k) just lost a few months (or years?) of retirement money, the stock market bloodbath diverted Wall Street’s attention from the monthly jobs report due Friday. Money managers have rolled back exposures to American equities to levels not seen since November 2023, according to a poll by the National Association of Active Investment Managers. Hedge funds dumped global stocks at the fastest rate in 12 years in March, according to Goldman Sachs data. As worries mount that the president’s trade policies will unleash a global recession, equity bulls conditioned over the past two years to see any pullback as a buying opportunity now say the risks are too great. From computer-driven funds to stock pickers, investors are pulling money out of the market that by some measures are the most defensive in over a year. All of which makes for an unusual setup ahead of one of the most closely watched economic data points. Regardless of what the report shows, investors see it as a lose-lose scenario, giving them little reason to stay in risk assets. “If the jobs print is good, traders are going to just shrug it off and point out that it was before Trump scared everyone with tariffs,” said Scott Ladner, chief investment officer at Horizon Investments. “But if employment growth slows, that will spook markets even more.”

In the US, the damage from Trump’s tariff war was being suddenly felt by some companies. RH Chief Executive Officer Gary Friedman let out an expletive for everyone to hear as he reacted to what was happening to the luxury furniture maker’s stock price last night. Trump had just announced his new tariffs as Friedman discussed RH’s earnings on a call with analysts, seemingly unaware of the scale of the market chaos Trump had unleashed. He was trying to persuade investors that the retailer—which operates the Restoration Hardware chain—was “well-positioned,” when he looked at the company’s share price. 

The Pentagon’s inspector general will conduct an investigation of the Signal group chat where Defense Secretary Pete Hegseth and other Trump administration officials discussed details of an impending attack on Houthi militants in Yemen. The now-infamous chat on an unsecure commercial app has had Trump reportedly mulling the departure of his National Security Adviser, Mike Waltz, a former Florida congressman. Waltz, who like Hegseth has little in the way of traditional qualifications for a role atop the defense establishment, accidentally invited a famous Washington journalist to join the chat. And since then, more news reports alleged Waltz used an even less secure platform for government business. Meanwhile, Trump has reportedly fired members of the National Security Council on the recommendation of a far-right influencer who has espoused 9/11 conspiracy theories.

Michael Waltz, left, and Pete Hegseth at their Senate confirmation hearing on Jan. 14 Photographer: Al Drago/Bloomberg

The dollar has wiped out all of its gains since Trump won the presidency in November. The Bloomberg Dollar Spot Index fell 1.5% on Thursday, closing at the lowest level since mid-October. The world’s reserve currency plunged along with US bond yields and US equities on fears that Trump’s trade war will slow economic growth. All of the dollar’s Group-of-10 peers—led by the Japanese yen and Swiss franc—rallied as traders sought havens. “The dollar bear market has arrived and is roaring,” said Paresh Upadhyaya, director of fixed income and currency strategy at Amundi, US, adding that the gauge could fall 10% this year as the US is “teetering on the edge of recession.”

It was shortly after 2 a.m. in Zurich when Mark Haefele, the chief investment officer at UBS Global Wealth Management, gave his verdict on Trump’s new tariffs. The Federal Reserve, Haefele wrote to his clients, will now have to cut interest rates far more aggressively this year—as many as four times. About 12 hours later, Michael Gapen, Morgan Stanley’s chief US economist, came to the exact opposite conclusion: The Fed couldn’t cut rates at all now. He and his team scrapped their call for a reduction in June and predicted the Fed would be forced to wait till next year to cut again. “The Fed will have trouble looking through the near-term impulse to inflation and ease quickly,” Gapen wrote in a note with his colleagues. So which is it?

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