The market plunges downard as China retaliates, US job growth still strong

The U.S. stock market experienced its worst week since March 2020 as trade tensions between the United States and China intensified. The S&P 500 plummeted 6% after China announced retaliatory tariffs matching President Donald Trump’s earlier measures. The Dow Jones Industrial Average plunged 2,231 points (5.5%), while the Nasdaq tumbled 5.8%, pushing it more than 20% below its December record and into bear market territory.

The market decline occurred despite a stronger-than-expected U.S. jobs report, indicating investors are more concerned about potential economic damage from escalating trade tensions than positive employment data to reassure them.

Federal Reserve Chair Jerome Powell addressed the situation on Friday, stating that the new tariffs are likely to increase inflation and reduce economic growth. Speaking to business journalists in Arlington, Virginia, Powell emphasized the “highly uncertain outlook” created by the reciprocal tariffs announced Wednesday.

“Our obligation is to keep longer-term inflation expectations well anchored and to make certain that a one-time increase in the price level does not become an ongoing inflation problem,” Powell said. He indicated that the Fed would wait for “greater clarity before considering any adjustments to our policy stance,” suggesting no immediate change to interest rates.

President Trump has publicly pressured Powell to cut rates. In a Truth Social post on April 4, Trump wrote: “This would be a PERFECT time for Fed Chairman Jerome Powell to cut Interest Rates. He is always ‘late,’ but he could now change his image, and quickly. Energy prices are down, Interest Rates are down, Inflation is down, even Eggs are down 69%, and Jobs are UP, all within two months – A BIG WIN for America. CUT INTEREST RATES, JEROME, AND STOP PLAYING POLITICS!”

When asked about Trump’s comments, Powell declined to respond directly, stating, “I make it a practice not to respond to any elected officials comments, so I don’t want to be seen to be doing that. It’s just not appropriate for me.”

The situation grew more complex when Trump shared a controversial video on Truth Social claiming he was deliberately causing a stock market decline as a strategic move to force lower interest and mortgage rates. The video falsely attributed a supportive quote to legendary investor Warren Buffett, who has since publicly denied making any such statement.

As markets continue to react to these developments, analysts are closely watching for signals of how prolonged this trade dispute might become and what further economic impacts may emerge from the escalating tariff battle.