U.S. stocks fell sharply on Tuesday, April 8, after a brief morning rally, as the White House confirmed it will raise tariffs on all Chinese imports. The announcement sent shockwaves through the market, wiping out earlier gains.
The Dow Jones Industrial Average dropped 320 points, or 0.84%, while the S&P 500 fell 1.57%. The tech-heavy Nasdaq Composite plunged 2.15%. This marked the second day in a row the S&P 500 flirted with bear market territory.
The losses came just hours after stocks surged in early trading on hopes of progress in trade talks. Investors had been looking for signs of relief after three straight days of declines.
Tariffs Trigger Panic Selling
White House Press Secretary Karoline Leavitt confirmed on Tuesday afternoon that President Donald Trump will impose an additional 84% in tariffs on Chinese goods starting Wednesday. This raises the total tariffs to at least 104% on all Chinese imports.
That news erased the morning rally. Earlier in the day, the S&P 500 and Nasdaq had jumped 4% and 4.5%, respectively. The Dow had risen as much as 3.85%.
But by the closing bell, those gains were gone. The S&P 500 closed at its lowest level in nearly a year. The Nasdaq and Dow hit their lowest points since January 2024.
Bear Market Signals
The S&P 500 briefly dipped into bear market territory during the trading session, falling more than 20% from its February peak before recovering slightly. It ended the day down 18.9% from that high.
The Nasdaq is already in a bear market, closing down 24.3% from its December record. The Dow is down 16.4% over the same period.
“We’re not out of the woods yet,” said Thomas Martin, senior portfolio manager at Globalt Investments. “There’s still a lot of fear in the market.”
Fear Takes Over
Wall Street’s fear gauge, the VIX index, jumped again on Tuesday, after hitting extreme levels in recent sessions. According to CNN’s Fear and Greed Index, investor sentiment is now deep in the “extreme fear” zone.
Investors had been hoping for a break before the new tariffs hit. But instead, the tariff announcement pushed markets further down.
“This kind of sharp move is normal after a market shock,” said Keith Lerner from Truist. “Markets are oversold, and people are trying to find bargains.”
Still, he warned that wild swings are likely to continue. “Any new bit of news gets blown up,” Lerner added.
Rumors, Hopes, and Missed Signals
On Monday, a false rumor about Trump pausing tariffs briefly lifted markets. That moment showed just how hungry traders are for any sign of relief.
“Even a hint of good news sends stocks soaring,” said Michael Block of Third Seven Capital. “It’s a setup for a huge rally — if real news ever comes.”
But instead of relief, more tough talk followed.
Kevin Hassett, Director of the National Economic Council, said the White House is handling “a massive number of requests for negotiations.” He added that Japan and South Korea are top priorities.
President Trump also posted on social media that he had a “great call” with South Korea’s Acting President. On Monday, he spoke with Japan’s Prime Minister Shigeru Ishiba about trade talks.
Global Reactions and Trade Risks
The European Union said Tuesday it’s open to buying more U.S. liquefied natural gas (LNG), responding to Trump’s push for trade balance.
Meanwhile, U.S. Trade Representative Jamieson Greer confirmed the administration is talking to 50 countries to address trade issues, including regulations that affect U.S. exports.
But Greer made it clear: “The president’s plan goes into effect Wednesday,” he said during a Senate hearing.
“High-Stakes Game of Chicken”
The trade battle between the U.S. and China is getting more intense. China’s Commerce Ministry said it would “fight to the end,” and it has already blocked several U.S. deals, including a plan for a U.S. company to run Panama Canal ports and a proposed sale of TikTok.
Both sides are bracing for more damage, and experts warn that a drawn-out trade war could harm both economies.
Recession Warnings
Banks like Goldman Sachs and JPMorgan Chase say more tariffs could tip the U.S. and global economies into recession this year. That fear is keeping stock prices low.
Still, some in the Trump administration are staying positive.
“It’s finding the bottom now,” said Peter Navarro, Trump’s top trade advisor, on Fox News. “Dow 50,000. I guarantee it.”
But others disagree. JPMorgan CEO Jamie Dimon warned in his letter to shareholders that Trump’s policies could hurt U.S. global influence and damage key alliances.
Even some Trump supporters, like Elon Musk and investor Bill Ackman, have said the tariffs are based on flawed ideas and could backfire.
