The stock market experienced a significant downturn on October 10, triggered by President Donald Trump’s threat to escalate tariffs on China. This announcement came in light of new restrictions imposed by China on natural resources, particularly rare earth metals, which are critical for producing various technological products.
The Nasdaq Composite Index plummeted as much as 2.6% early in the afternoon, while the S&P 500 declined by 1.9% and the Dow Jones Industrial Average saw a reduction of 1.3%. Although there was a brief recovery, stock values returned to roughly the same levels by 2 p.m., indicating ongoing investor uncertainty.
Notable drops were seen among major companies, with Vanguard down 1.73%, Nvidia slipping 2.43%, Amazon falling by 3.64%, Tesla decreasing 3.85%, Apple off by 2.6%, and Invesco QQQ down 2.28%. The dramatic shift was largely attributed to a post on Truth Social, in which Trump accused China of becoming increasingly hostile by curtailing the supply of rare earth metals.
In his post, Trump expressed surprise at China’s actions, considering that the U.S. had enjoyed a positive relationship with China in recent months. He further claimed, “I have always felt that they’ve been lying in wait,” suggesting a long-standing strategy by China to manipulate global markets. Trump’s comments emphasized that China should not be allowed to “hold the World ‘captive,'” pointing to a perception of ongoing geopolitical tensions.
Amidst this turmoil, Trump highlighted an upcoming meeting with Chinese President Xi Jinping in South Korea, stating that the recent developments had undermined the necessity of that engagement. He mentioned that the administration was contemplating a “massive increase” in tariffs along with other countermeasures, asserting, “I never thought it would come to this but perhaps, as with all things, the time has come.” He posited that, while the potential consequences of the tariffs might be painful in the short term, they could ultimately benefit the United States.
Prior to Trump’s post, the stock market had been on a high trajectory, with the Nasdaq achieving a new all-time peak the day before. As the market reacts to these potential economic shifts, investors are left grappling with the implications of renewed trade tensions and the future direction of U.S.-China relations.
