Global Stocks Crash as China Retaliates in Escalating Trade War

Urgent Market Turmoil Signals Recession Fears

Global stock markets plummeted as China announced retaliatory tariffs of 34% on US goods, intensifying the US-China trade war and sparking widespread investor panic. This dramatic escalation, coupled with Beijing's export controls on rare earths and the addition of 11 US entities to its "unreliable entity" list, has driven the biggest market losses since the pandemic, raising urgent concerns about a looming global recession. The Nasdaq Composite officially entered a bear market, dropping from its record high of 20,173.89 on December 16, while the Dow Jones Industrial Average confirmed a correction from its peak of 45,014.04 on December 4. For the week, the S&P 500 fell 9.08%, the Nasdaq declined 10.02%, the Dow dropped 7.86%, and the Russell 2000 Small Cap Index sank 9.70%. Investment bank J.P. Morgan now estimates a 60% chance of a global economic recession by year-end, up from 40%, as fears of a prolonged "tit for tat" trade war grip financial markets. Stephane Ekolo, Market & Equity Strategist at Tradition in London, noted, "This is significant and unlikely to be over, hence the negative market reactions. Investors are terrified of an escalating trade war situation." The combination of US President Donald Trump's aggressive tariff policies and China's swift countermeasures has sent shockwaves through global economies, with other nations like Canada preparing retaliatory actions and Japan declaring a "national crisis" amid plunging banking shares.

Stock Market Performance and Specific Company Impacts

The escalating US-China trade war has directly impacted major companies, with stock prices reflecting the market's volatility. General Motors (GM) saw its stock decline by 3.75%, closing at an estimated $44.27 based on a prior close of $45.9, as calculated from available financial data. Apple (AAPL) experienced a sharper drop of 7.29%, with its stock price falling to approximately $188.47 from a prior close of $202.95, driven by fears of tariff-induced price hikes on its products like the iPhone. In contrast, Nike (NKE) bucked the trend, gaining 3.00% to close at around $57.26 from a prior $55.58, possibly due to its diversified supply chain mitigating some tariff effects. Stellantis (STLA) on the NYSE fell 4.80%, closing at an estimated $17.37 from $18.24, while its Milan listing (STLAM) dropped 6.19%, closing at approximately $11.43 (converted from €10.69 at an exchange rate of 1 $ = 1.07 $), reflecting the auto sector's vulnerability to trade disruptions. These figures, derived from percentage changes reported in real-time market updates, highlight how the trade war's economic fallout is hitting industries differently, with tech and automotive sectors bearing significant pressure while apparel shows resilience.

The broader market indices underscore the severity of the downturn. The Nasdaq's bear market status and the Dow's correction signal a shift in investor confidence, exacerbated by Trump's unwavering stance on tariffs and China's retaliatory measures. Federal Reserve Chair Jerome Powell, speaking at a business journalists conference, acknowledged that the tariffs were "larger than expected," elevating risks of both higher inflation and slower economic growth. He emphasized the Fed's focus on monitoring data to keep inflation expectations stable, noting that businesses are pausing decisions amid uncertainty. "People are just waiting for clarity," Powell said, adding, "I can’t tell you when that will pass, but ultimately it will." Meanwhile, Trump, posting from his golf course on Truth Social, urged Powell to cut interest rates, writing, "CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!" This public pressure, combined with his team's claim that market turbulence is a temporary adjustment, contrasts sharply with growing economic warnings from experts and political figures like Senator Ted Cruz, who cautioned that prolonged tariffs could impose "trillions of dollars of increased taxes on American consumers" and pose "enormous risks" to the US economy.

Global Economic Ripples and Policy Responses

The US-China trade war's effects extend far beyond American borders, triggering a cascade of economic challenges worldwide. In Canada, employment fell for the first time since 2022, with the unemployment rate rising as companies paused hiring and initiated layoffs due to tariff uncertainty. Japan, a key US trading partner, saw its stock market head for its worst week in years, with Prime Minister Shigeru Ishiba labeling the tariffs a "national crisis" as banking shares collapsed. The European Union, facing a 20% duty on its exports to the US, is grappling with internal divisions on how to respond. EU Trade Commissioner Maros Sefcovic, after a "frank" two-hour call with US Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer, warned that "US tariffs are damaging, unjustified," pledging negotiations while preparing to defend EU interests. French President Emmanuel Macron pushed for companies to freeze US investments, but French Finance Minister Eric Lombard cautioned against mirroring US tariffs, noting the potential harm to European consumers.

China's retaliation, including its 34% tariffs and rare earth export controls, targets Trump's policies, which impose a 10% baseline tariff on US imports starting Saturday, with a grace period until May 27 for shipments already underway. Beijing's addition of 11 US entities to its "unreliable entity" list, particularly those linked to arms sales to Taiwan, escalates geopolitical tensions, further unsettling markets. Trump, undeterred, extended a deadline for ByteDance to sell TikTok by 75 days, signaling a broader strategy to pressure Chinese tech firms. His administration argues that "reciprocal" tariffs will boost US manufacturing jobs and open export markets, though officials admit results will take time. Treasury Secretary Scott Bessent, in an interview with Tucker Carlson, attributed some market declines to China's DeepSeek AI tool rather than tariffs alone, a claim that adds complexity to the economic narrative.

Consumer and Industry Implications

The trade war's fallout is poised to hit consumers hard, with potential price increases looming for everyday goods. Analysts from Rosenblatt Securities project that a high-end iPhone could cost nearly $2,300 if Apple passes on tariff costs, a stark example of how US shoppers could feel the pinch on everything from electronics to running shoes. The auto industry, represented by GM and Stellantis, faces rising production costs, threatening labor market stability despite a stronger-than-expected US jobs report for March. Trump's social media posts, like "This is a great time to get rich, richer than ever before!!!" and "China played it wrong, they panicked," reflect his confidence in long-term gains, but immediate market reactions suggest otherwise. J.P. Morgan's recession odds and Powell's cautious outlook paint a picture of an economy at a crossroads, with businesses and investors bracing for prolonged uncertainty.

For a clearer view of the stock impacts, the table below summarizes estimated closing prices based on reported percentage changes and prior day closes:

Stock	Ticker	Prior Day Close	Percentage Change	Estimated Close	Currency
GM	GM	$45.9	3.75% decrease	$44.27	$
AAPL	AAPL	$202.95	7.29% decrease	$188.47	$
NKE	NKE	$55.58	3.00% increase	$57.26	$
STLA	STLA	$18.24	4.80% decrease	$17.37	$
STLAM	STLAM	$11.39	6.19% decrease	$11.43	$

Note: STLAM's prior close is converted from €11.39 to $11.39 at an exchange rate of 1 $ = 1.07 $, with the estimated close reflecting the same conversion for consistency.

Political and Market Outlook

Politically, the trade war reveals fissures within the US and abroad. Senator Cruz, a Trump ally, voted against legislation to end new tariffs on Canada, yet warned of dire economic and political consequences if the standoff persists, hoping Trump uses tariffs as leverage to lower global trade barriers. Trump's absence from public view, coupled with defiant social media messaging, contrasts with the White House's touting of robust job data, creating mixed signals for investors. Globally, the EU's divided stance and Japan's crisis mode highlight the stakes, as markets await clarity on whether negotiations or further escalation will define the path forward. With the Fed poised to act if inflation spikes and businesses holding off on investments, the US-China trade war remains a pivotal force shaping economic and market trajectories, leaving investors and consumers alike on edge.

Key Citations

• Stocks slump again after China fires back in trade war with tariffs on US goods Reuters
• The Motley Fool GM Stock Price
• MacroTrends Apple Stock Price History
• Finviz Nike Stock Quote
• Morningstar Stellantis Stock Quote
• Yahoo Finance Stellantis Milan Stock Quote
• CNBC Trump Tariff Live Updates
• CNN Markets Nike Stock Quote