Markets sold off sharply after renewed US-China tariff threats reignited concerns around supply chains, trade disruption and global economic growth.
Global markets delivered a sharp reminder of their sensitivity to policy shocks at the end of the week as US President Trump reignited investor anxiety over US-China tariffs on Friday.
In a sudden ramp-up in rhetoric, Trump threatened to impose an additional 100% tariff on Chinese imports and announced new controls on critical software, triggering a broad market sell-off. In local terms, the S&P 500 index fell 2.7%, while the Nasdaq lost 3.6%, marking the steepest daily drop since the tariff turmoil earlier this spring. Technology and AI-linked names, especially those dependent on Chinese supply chains, led the retreat amid fears of supply disruptions. Other risk assets sold off, with crypto markets, which have been particularly buoyant of late, seeing their largest liquidation event in history.
Nerves were already frayed by China’s move to tighten export restrictions on rare earth elements critical for technology manufacturing and military hardware. In response, Friday’s escalation risked bringing to a halt the tentative thaw in relations between Washington and Beijing of recent weeks, with Trump even suggesting he might cancel a scheduled bilateral summit with President Xi.
Yet, over the weekend, Trump’s softened his tone, with the President signalling that talks with China remained on track. This hints at the familiar pattern seen after previous tariff shocks earlier in the year, when some of the most aggressive policies were ultimately watered down or deferred through negotiation.
For us, these latest developments serve as a reminder of the current state of markets where the modus operandi is to sell first and ask questions later. In the current environment, maintaining discipline, diversification, and having longer-term value on your side seems prudent.
