Wall Street tumbles 10% below its record after Trump escalates trade war

In New York, Wall Street experienced a significant drop on Thursday as President Donald Trump’s intensifying trade war pushed the S&P 500 more than 10% below its recent record high set just a month ago. A 10% decline is considered a correction by financial experts, and the S&P 500’s 1.4% decrease on Thursday marked its first since 2023. Trump’s trade war escalation, including threats of substantial tariffs on European wines and alcohol, contributed to the market downturn. Despite positive news about the U.S. economy, the losses persisted.

The Dow Jones Industrial Average fell by 537 points, or 1.3%, on Thursday, while the Nasdaq composite dropped by 2%. Stock market volatility has been intense, with fluctuations occurring not only daily but also hourly. The uncertainty surrounding Trump’s trade policies and their impact on the economy has led to the market’s erratic behavior.

Trump’s latest move involved threatening 200% tariffs on Champagne and other European wines in response to the European Union imposing tariffs on U.S. whiskey. The ongoing trade tensions have created anxiety among U.S. households and businesses, affecting consumer confidence and spending patterns.

One of the concerns is the potential for stagflation, where economic growth stagnates while inflation remains high due to tariffs. Washington has limited options to address this issue. However, there were positive developments on Thursday, including milder-than-expected wholesale inflation and fewer unemployment benefit claims than anticipated. These reports suggest a relatively solid job market and could support consumer spending, a crucial driver of the economy.