Dow Jones Industrial Average whipsaws on fresh tariff ramp-up
- The Dow Jones is heavily battered on Monday as trade war continues to weigh.
- President Trump ramped up trade war threats, promises more tariffs on China.
- Equity recovery on possible tariff extensions evaporated early.
The Dow Jones Industrial Average (DJIA) whipsawed sharply on Monday, kicking off the new trading week with a tumultuous opening volley. The Dow Jones opened the week over a thousand points below Friday’s close, and continuing to decline below the 37,000 level for the first time since December of 2023 as the tariff rout continues.
It’s no use, Mr. Xi - it’s tariffs all the way down
Investor sentiment rapidly surged on rumors that the Trump administration was considering a 90-day tariff extension, sending equities higher and pinning the DJIA into the 39,000 level. United States (US) President Donald Trump quickly took to social media to declare that not only were the rumors false, but that Donald Trump intends to issue an additional 50% tariff to take effect on April 8 aimed at China. The fresh tariff threats is in response to a retaliatory 34% tariff on US goods issued by China, which itself was targeted by a 34% “reciprocal” tariff by the US last week, which is also set to take effect on April 9.
Fresh tariff threats sent the Dow Jones tumbling back to 37,500, wiping out Monday’s brief rumor-fueled recovery rally. US equity indexes are down sharply across the board, with the Standard & Poor’s 500 (S&P) megacap index tumbled another 1.3%, falling to 5,000. The tech-heavy Nasdaq Composite also fell 0.9%, shedding 140 points to test below 15,500.
Stock news
Despite a general decline in market sentiment, key tech players are still finding gains on Monday. Super Micro Computer (SMCI) rallied 10% to $33 per share as the server rack solution provider recovers from a leadership shakeup, and AI rally darling Nvidia (NVDA) rose 3% to $97 per share. Physical product merchants took a hit on tariff threats, with Nike (NKE) falling 5% and sliding below $55 per share, while China-reliant tech manufacturer Apple (AAPL) tumbled 4.2% to fall below $181 per share.
Read more stock news: Alibaba slides 10% after Trump threatens to raise China tariff
Dow Jones price forecast
Despite a desperate low-end recovery, the Dow Jones remains buried deep in bear country. Price action is stuck near technical levels not seen since early 2024, trading down around 16% from record highs set last December just north of 45,000.
Monday’s technical bullish rejection from the 37,000 handle could see an increase in near-term recovery bidding. However, the Dow Jones is still well below the 40,000 major price level, and the 200-day Exponential Moving Average (EMA) is stuck near 42,000, marking out plenty of areas for bulls to lose control once again if a recovery continues.
Dow Jones daily chart
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
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FXStreet Insights Team
FXStreet
The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.
