United States markets tumbled on Friday as President Donald Trump’s renewed threat of higher tariffs on China sparked a sharp sell-off, pulling major benchmarks from record highs and rattling investors already unnerved by the ongoing government shutdown.
The Dow Jones Industrial Average dropped 878.8 points, or 1.9%, to 45,479.6, while the S&P 500 sank 182.6 points, or 2.7%, to close at 6,552.5. The Nasdaq Composite slid 820.2 points, or 3.6%, to 22,204.4, marking its steepest one-day decline since April.
Before Trump’s comments, all three major indices had been trading firmly higher, with the Nasdaq touching a new all-time intraday peak.
The president accused China of “becoming very hostile” and of holding the world “captive” through its control of rare earth metals - a crucial input for technology and defence manufacturing.
“I was to meet President Xi in two weeks, at APEC, in South Korea, but now there seems to be no reason to do so,” said Trump in a post on Truth Social.
“One of the policies that we are calculating at this moment is a massive increase of tariffs on Chinese products coming into the United States of America.”
His comments came just days after Beijing tightened its grip on the rare earths market, requiring foreign entities to obtain a government licence to export any product containing more than 0.1% of rare earth content.
The move raised alarm among Western nations that rely heavily on Chinese supply chains.
Technology shares bore the brunt of the sell-off, as Nvidia retreated 4.9%, AMD fell 7.7%, while Tesla lost 5.1%.
Commodity markets were also hit, with U.S. crude oil prices down 3.8%.
Meanwhile, the U.S. government shutdown entered its 10th day, with The Senate on Thursday failing for a seventh time to pass rival stopgap funding bills that could reopen federal agencies.
With the shutdown continuing, layoffs of federal workers “have begun”, Trump administration budget chief Russell Vought said in a social media post Friday.
For the week, the Dow shed 2.7%, the S&P 500’s finished 2.4% lower, and Nasdaq posted weekly losses of 2.5%.
On the bond markets, yields also declined as investors sought safety. The 10-year Treasury yield fell 2% to 4.059%, while the 2-year yield eased 1.9% to 3.531%.
