US stocks tank and dollar slumps as Trump tariffs hit trading

US stocks have suffered steep falls with the top index tanking to a six-month low shortly after opening, as Donald Trump’s tariffs reverberated through the world’s financial markets.

The S&P 500 plummeted about 4% to 5,440 shortly after markets opened in Wall Street – hitting the lowest level since September.

The Dow Jones tumbled around 3.6%, while the technology-focused Nasdaq index plunged nearly 5%.

Mr Trump’s plans for sweeping import levies on countries around the world has sent shockwaves through global markets.

The president said his plans will bolster production in the US and support home-grown goods, but economists have said the short-term impact will be higher prices and slower growth across the economy.

European and UK markets have also been seeing sharp drops in the aftermath of the speech in the White House last night.

The Dax is Germany was down by about 2.8%, and the Cac 40 had plunged 3.3% by late afternoon.

In the UK, the FTSE 100 was falling around 1.5% to a three-month low of 8,476.

The US dollar continued to drop sharply against key currencies on Thursday. It had slumped 2.5% against the euro, at around 0.9, in the afternoon, to hit a six-month low.

It was also tumbling around 1.2% against the pound, at 0.76.

A group of analysts for Barclays said there was a “high risk that the US economy enters a recession this year” in a note published on Thursday.

Inflation is predicted to rise and gross domestic product (GDP) to decrease – which raises the risk of so-called “stagflation” in the economy.

Barclays also said that, if a recession kicks in, firms could announce large-scale layoffs which would send the country’s unemployment rate higher.

Chris Beauchamp, chief market analyst for online trading platform IG, said: “The key feature of the last two years and more has been the resilience of the US economy.

“Trump’s tariffs, along with the government job cuts and the potential for massive spending cuts, seem doomed to kill the goose that laid the golden egg.

“Of course Trump and his team hope that their tax cuts and deregulation agenda can create a bounceback that will shock and awe the world, but the pain that has to come first is likely to be brutal for equity markets worldwide.”