U.S. Markets Plunge as Trump’s New Global Tariffs Create Economic Uncertainty

American stock markets dropped sharply Monday following President Trump's announcement of new 15% global tariffs after the Supreme Court struck down previous duties. The uncertainty has investors fleeing to safer assets like gold and Treasury bonds while private credit concerns add to market jitters.

U.S. stock markets experienced significant losses Monday as investors grappled with fresh uncertainty surrounding President Trump’s trade policies and growing concerns about artificial intelligence’s impact on the software industry.

The market downturn came after the Supreme Court declared most existing tariffs unlawful, prompting Trump to immediately respond with a temporary 15% levy on global imports. This development has created widespread confusion among investors, businesses, and consumers who thought they had navigated the previous round of trade disputes.

The uncertainty extends beyond just trade policy, affecting federal revenue projections, potential tariff refund litigation, existing trade agreements, upcoming midterm elections, inflation expectations, and asset valuations. Market analysts acknowledge that nobody has clear answers about the ultimate consequences.

Adding to market stress, the private credit sector continues facing scrutiny due to exposure to struggling U.S. software companies and liquidity issues. Blue Owl, an alternative asset manager, suspended redemptions at one of its funds, causing its shares to drop another 3% Monday. The company has lost nearly 25% of its value this month alone.

Major private credit firms Apollo and KKR saw their stock prices fall 5% and 9% respectively. UBS analysts warn that private credit defaults could potentially increase by 8% over the coming year in a worst-case scenario.

The software sector’s troubles have deepened, with the industry down 25% year-to-date and having erased almost all gains made since April’s “Liberation Day.” This decline pushed the S&P 500 back into negative territory for the year.

While the Nasdaq has fallen 3% and the Dow remains up 1.5% year-to-date, U.S. markets are significantly underperforming international counterparts. Europe’s STOXX 600 has gained 6%, Britain’s FTSE 100 is up 8%, and Japan’s Nikkei has climbed 12%. Asian chip-making centers Taiwan and South Korea have seen even stronger performance, with stocks rising 16% and 38% respectively.

During Monday’s trading session, investors sought traditional safe-haven assets. Gold reached a three-week high above $5,200 per ounce, while silver jumped 5%. Treasury bonds rallied, pushing yields down as much as 7 basis points. The Swiss franc and Japanese yen strengthened, while the U.S. dollar weakened and bitcoin fell 5% below $64,000.

Among U.S. stocks, six S&P 500 sectors managed gains, led by healthcare and consumer staples. However, five sectors lost at least 1%, with financials suffering the biggest decline at 3% – their worst performance since April. Individual stock losers included IBM, down 13%, and KKR, falling 9%.

Currency markets saw the Mexican peso as the day’s biggest decliner, falling 1%, while the Norwegian crown dropped 0.5%. Oil prices hit six-month highs before ending lower.

Looking ahead, several Federal Reserve officials are scheduled to speak Tuesday, including Chicago Fed President Austan Goolsbee, Atlanta Fed President Raphael Bostic, and Boston Fed President Susan Collins. The Treasury Department will auction $69 billion in two-year notes, and President Trump will deliver his State of the Union address after markets close.

The current market environment reflects growing concerns about policy uncertainty and sector-specific challenges, with investors remaining cautious as they await clearer direction on trade policies and economic conditions.