Dow Is Falling as China Retaliates to Trump Tariffs The S&P 500 and Nasdaq are also dropping amid a Treasuries selloff on the day U.S. levies kick in across the world.

Stock Market News: Dow Is Falling as China Retaliates to Trump Tariffs

The S&P 500 and Nasdaq are also dropping amid a Treasuries selloff on the day U.S. levies kick in across the world.

By Steven Orlowski, CFP, CNPR

April 9, 2025 — The U.S. stock market stumbled sharply on escalating trade tensions, with the Dow Jones Industrial Average tumbling as China retaliated against a new wave of tariffs imposed by the United States. The S&P 500 and Nasdaq also saw steep losses, as global investors reacted to fears of a prolonged trade war and broader economic fallout.

The selloff was compounded by a swift drop in U.S. Treasury prices, sending yields higher and adding to investor anxiety. On the day that Washington's latest tariffs took effect, targeting a wide array of Chinese exports, Beijing responded with its own levies, aimed at American goods including agricultural products, industrial machinery, and autos.

The Dow was down over 500 points by midday, led by declines in industrial and multinational companies such as Caterpillar, Boeing, and 3M—all of which have significant exposure to Chinese markets and global supply chains.

The S&P 500 dropped more than 1.5%, with every major sector in the red, while the tech-heavy Nasdaq slid nearly 2%, as chipmakers and large-cap tech stocks like Apple and Nvidia absorbed heavy selling pressure.

Treasury Market Reacts to Risk-Off Sentiment

In a parallel move, Treasury yields spiked as bond prices declined, reflecting uncertainty about U.S. fiscal policy and the potential for rising inflation. The 10-year yield rose to 4.35%, its highest level in months, driven by investor skepticism about the Federal Reserve’s ability to remain dovish amid geopolitical shocks and sticky inflationary pressures.

“This is a classic risk-off day,” said Marisa Chen, chief strategist at Lancer Capital. “You’ve got tariffs taking effect, retaliation from China, and now the bond market is flashing concern about both inflation and policy credibility.”

Global Implications

The ripple effects extended beyond Wall Street. European and Asian markets closed lower, and currencies in emerging markets lost ground against the dollar, as investors sought the safety of U.S. cash positions. Commodity prices also wavered, with oil dipping on worries about slowing global growth and gold rising as a haven asset.

The Trump administration’s tariffs—aimed at over $200 billion in Chinese imports—are part of an ongoing strategy to pressure Beijing on trade practices, intellectual property rights, and market access. But the timing and breadth of China’s countermeasures suggest a hardened stance, with analysts warning that neither side appears willing to back down soon.

“Investors are now pricing in the possibility of a long-term economic cold war between the world’s two largest economies,” said David Callahan, a senior economist at Meridian Research. “This is not just about trade anymore—it’s about economic dominance and global influence.”

What’s Next?

Markets will continue to monitor any signs of diplomatic overtures or further escalations. The White House has not yet responded to China’s latest tariffs, but officials have hinted at additional measures, including potential restrictions on Chinese investment in U.S. companies.

Meanwhile, the Federal Reserve remains in a delicate position. Fed Chair Jerome Powell is scheduled to speak later this week, and markets will be watching closely for any shift in tone regarding interest rate policy or economic outlook in light of rising geopolitical risks.

For now, volatility looks set to remain high, with investors grappling with a complex mix of trade tensions, inflation concerns, and a shifting global economic order.