Markets are in meltdown. Global investors are scrambling. And Donald Trump has once again pulled the trigger on one of the most controversial economic weapons in his arsenal: tariffs. On April 9, 2025, the former—and potentially future—U.S. president enacted a sweeping new trade policy that slapped a jaw-dropping 104% tariff on Chinese imports. Almost instantly, global markets took a nosedive.
Leading the collapse? The FTSE 100, the UK’s benchmark stock index, which fell by 2.8%, its sharpest single-day loss in months. This wasn’t an isolated dip—it was the start of what financial analysts are now calling a “marketwide panic.” Across Asia, Europe, and North America, investors reacted swiftly to what many see as the start of a full-blown trade war escalation between the world’s two largest economies.
In this article, we break down what these tariffs mean, how global markets are responding, and what the implications are for economies, businesses, and everyday investors. If you’re looking to understand why your portfolio’s bleeding or why world leaders are holding emergency meetings—read on.
Trump’s 104% Tariff on China: What Happened?
In classic Trump fashion, the announcement came fast, hard, and with maximum shock value. At exactly midnight Eastern Time, a 104% tariff took effect on a wide swath of Chinese goods, ranging from tech components to consumer electronics, auto parts, and more. The sheer size of the tariff stunned even seasoned economists, many of whom expected a hike—but nothing this extreme.
The rationale? Trump cited unfair trade practices, intellectual property theft, and the persistent U.S.-China trade imbalance. He also framed it as a defense of American jobs and manufacturing—a cornerstone of his campaign message in both 2016 and now in the run-up to 2024.
This wasn’t just another policy update—it was a declaration. Trump told supporters and reporters that he was “willing to go to war for America’s economic future.” That war, it seems, has already started—and the battlefield is global finance.
What makes this tariff different is its scale and immediacy. Unlike previous trade policies that gradually roll out, this was implemented overnight, forcing businesses and markets to react with no time to prepare.
Global Market Reaction: From Asia to Europe
The global economy runs on confidence. And Trump’s tariff wiped that out in less than 24 hours.
Asian markets opened first—and bled immediately. Japan’s Nikkei 225 plummeted over 5%, with South Korea’s Kospi and Hong Kong’s Hang Seng following suit. Electronics and tech-heavy stocks were hit the hardest, as supply chains between the U.S. and China suddenly faced massive cost increases.
As Europe opened, the pain spread. The FTSE 100 dropped 2.8%, led by losses in pharmaceutical and tech firms. Germany’s DAX index fell 2.4%, while France’s CAC 40 dipped 2.6%.
And across the Atlantic? U.S. futures were sharply lower. Dow futures suggested a drop of nearly 600 points at the opening bell. Investors, already jittery from inflation fears and tightening central bank policies, now faced the added uncertainty of a trade war revival.
Currency markets also took a hit. The Chinese yuan weakened sharply against the dollar, signaling investor expectations of more pain ahead for China’s export-driven economy. Meanwhile, the pound and euro saw brief upticks as safe-haven seekers pulled back from volatile equities.
FTSE’s 2% Crash: What Drove the Drop?
The FTSE 100’s plunge wasn’t just about global panic—it was about specific vulnerabilities.
First off, the UK’s biggest companies have massive global exposure, particularly to U.S. and Chinese markets. Giants like AstraZeneca, HSBC, and GlaxoSmithKline rely on international trade to sustain growth. With tariffs threatening supply chains and demand, investor sentiment soured fast.
Second, sectors like healthcare and tech were hit hardest. Pharmaceutical companies were targeted by potential Chinese countermeasures, while tech firms face delays and cost spikes in components sourced from Asia. Even the energy sector, typically more insulated, felt the heat as oil prices dropped in anticipation of slower global demand.
But perhaps most telling was the speed of the sell-off. Automated trading algorithms triggered wave after wave of selling once the tariff numbers were confirmed. Within hours, billions were wiped from the FTSE’s market cap.
And this may only be the beginning.
China’s Fiery Response to Tariffs
If Trump’s move was explosive, China’s response was immediate and fierce. Beijing imposed a 34% retaliatory tariffon U.S. goods ranging from agricultural products to cars and electronics. In a press statement, Chinese officials vowed to “fight till the end”, accusing the U.S. of economic blackmail and unilateral aggression.
Chinese state media took it a step further, calling Trump’s move “an act of trade terrorism.” The language is strong, and so is the intent—China isn’t backing down.
These retaliatory tariffs are already hurting American exporters, especially in the Midwest and agricultural sectors. Soybeans, pork, and dairy products are expected to see significant losses as access to Chinese markets tightens.
The U.S.-China trade relationship is vast and complex, but the key takeaway here is simple: both sides are now locked in a high-stakes economic confrontation that shows no sign of slowing down.
