Dow Sinks 400 Points as Trump’s 25% Tariff Threat on Japan and South Korea Rattles Wall Street
U.S. stock markets fell sharply on Monday as President Donald Trump escalated global trade tensions by announcing new 25% tariffs on imports from Japan and South Korea, set to take effect August 1.
The Dow Jones Industrial Average dropped 447 points, or about 1%, while the S&P 500 slipped 0.9% and the Nasdaq Composite declined by the same margin. Stocks, which had hit all-time highs last week, retreated as Trump shared screenshots of formal letters sent to Japanese Prime Minister Ishiba Shigeru and South Korean President Lee Jae-myung, outlining the sweeping trade measures.
“There will be no exceptions to this policy,” Trump declared on Truth Social, warning that countries supporting BRICS—including China and India—would face an additional 10% tariff. He added that transshipped goods attempting to bypass tariffs would be penalized accordingly.
The moves came amid increasing diplomatic friction with BRICS nations, who released a joint statement from their Rio de Janeiro summit condemning the U.S. for “unilateral tariff actions.”
The tariffs also threaten to reignite global trade wars, with only the UK, Vietnam, and China (tentatively) having reached some form of agreement ahead of Trump’s earlier July 9 deadline. Treasury Secretary Scott Bessent confirmed the tariffs would begin August 1, giving trade partners one last window to negotiate.
Tesla Dives Amid Broader Market Concerns
Amid the turmoil, Tesla shares plummeted over 7.4%, adding to recent declines tied to investor concerns over Elon Musk’s political involvement and his new “America Party”. Tesla’s stock losses wiped out over $16.7 billion in market value Monday, making it the worst single-day performance for the company since Musk’s prior fallout with Trump.
“The market is reacting to multiple layers of uncertainty—Trump’s aggressive trade stance, Musk’s distractions, and a potential earnings slowdown,” said Saxo Markets strategist Neil Wilson.
Other Market Reactions
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The U.S. dollar strengthened, while the euro and yen weakened.
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10-year Treasury yields edged up, indicating investor caution.
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The CBOE Volatility Index (VIX) rose 8%, signaling growing market unease.
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Bitcoin hovered near record highs at around $109,000.
With only weeks to go before tariffs take effect, global markets are bracing for further volatility. The European Union, facing its own 50% tariff threat, is scrambling to secure a deal by Trump’s July 9 cutoff.
As earnings season kicks off this week—with Delta Airlines leading on Thursday—investors will be watching both corporate results and Washington’s next trade moves closely.
