Global markets were rocked after Trump’s “Liberation Day” tariff announcement on April 2, but they recovered sharply after tariff pauses and a wave of strong tech earnings. The result was one of the most volatile stretches for stocks, bonds and currencies in years.
The initial tariff package, which included a 10 percent baseline levy on nearly all imports and higher country-specific rates, triggered a huge selloff. Over the next two trading days, U.S. markets lost more than $6trillion in value, while the S&P 500, Nasdaq and Dow all fell sharply and the VIX spiked to levels not seen since the early pandemic period.
The shock spread quickly overseas. European equities slumped, Japan’s Nikkei saw a steep one-day drop, Hong Kong suffered its worst session in decades, and several emerging markets imposed emergency trading limits or circuit breakers to slow the panic.
Bonds and currencies
The tariff shock also hit bond markets hard. Treasury yields first dropped as investors sought safety, then surged as fears of a prolonged trade war and inflationary pressure took hold. Long-dated government debt in Japan and the UK also sold off sharply, prompting emergency policy meetings and bond-market adjustments.
The US dollar weakened as trade-war anxiety intensified, adding another layer of instability to already fragile global markets.
The rebound
The mood changed dramatically after Trump announced a 90-day pause on most reciprocal tariffs, even as China’s tariff rate was increased. That relief rally, combined with strong tech earnings, triggered a powerful reversal in risk assets.
On April 9, the S&P 500 posted one of its biggest single-day gains in years, the Dow surged, and the Nasdaq jumped more than 12 percent. Treasury yields also eased back from their peak as investors reset their expectations for the policy path ahead.
Why it mattered
The episode showed how quickly tariff policy could ripple through every corner of the financial system, from equities and bonds to currencies and commodities. It also underscored how dependent the market rebound was on policy pauses and optimism around big technology names, rather than any resolution of the trade conflict itself.
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