Tariff policies directly impact financial markets

The "reciprocal tariff" policy implemented in the US in April 2025 immediately triggered panic selling in the market, with S&P 500 futures falling over 4% in a single day and Nasdaq futures dropping over 5%, while the VIX volatility index surged by 34.4%. This extreme volatility stems from investors' concerns about the disruption of global supply chains and declining corporate profits, particularly affecting technology, retail, and manufacturing sectors that rely on global trade. Apple's stock plummeted 9% in a single day, and Nike fell by 14.5%, reflecting the cost pressures faced by multinational corporations.

Commodity market and exchange rate chain reactions

Tariff policies have led to a sharp decline in commodity prices across the board, with WTI crude oil breaking below the critical support level of $60 per barrel, New York copper futures plummeting 8%, and safe-haven assets like gold also experiencing unusual declines. Non-US currencies have generally depreciated, with the Australian dollar falling by 1% against the US dollar, while the Japanese yen rose by 1% due to safe-haven demand. This synchronized decline across asset classes reflects deep market concerns about shrinking global demand, triggering a wave of forced liquidations in program trading and leveraged funds.

Corporate profit expectations have sharply deteriorated

Data from the American Apparel and Footwear Association shows that 97% of clothing and footwear relies on imports, and tariffs will directly increase corporate costs. Retail giants warn that product prices will generally rise by 15-25%, putting small businesses at risk of closure. The technology sector is experiencing supply chain disruptions due to tariffs on key components like chips, with the Philadelphia Semiconductor Index plummeting nearly 10% in a single day. This drastic downward revision of profit expectations has triggered a wave of downgrades from Wall Street analysts.

Restructuring of global capital flow patterns

Tariff policies have led to the evaporation of nearly $7 trillion in market value, accelerating the withdrawal of international capital from risk assets. US mutual funds have seen a phenomenon of "cash is king" hoarding, while emerging markets are facing a triple whammy of stocks, bonds, and currencies, with the Vietnamese stock market plunging 6.8% in a single day. The US dollar index unusually fell by 1.5%, weakening in tandem with risk assets, indicating the market's punishment for America's "self-harming" policies. This large-scale capital migration further amplifies market volatility.

Policy uncertainty suppresses investment

The Trump administration's differentiated tariff design of "one country, one tax rate" (such as maintaining a 25% tariff rate on Canadian steel and aluminum) has caused significant chaos. The retaliatory threats from trade partners like the EU and Canada make it difficult for businesses to formulate long-term plans, reducing global business investment willingness to the lowest level since the pandemic began in 2020. Federal Reserve Chairman Powell acknowledged that this uncertainty has put monetary policy in a dilemma, further undermining market confidence.