US Stocks Fall Amid Uncertain Tariff Policies and Trade War

New York, NY — US stocks experienced a significant decline on Wednesday as uncertainty surrounding President Donald Trump’s tariffs continues to weigh heavily on investor sentiment. The Dow Jones Industrial Average tumbled 700 points, or 1.73%, while the broader S&P 500 fell 2.24%. The tech-heavy Nasdaq Composite saw an even sharper decline, dropping 3.07%.

Federal Reserve Chair Jerome Powell voiced concerns at an event in Chicago, stating, “The level of the tariff increases announced so far is significantly larger than anticipated. The same is likely to be true of the economic effects, which will include higher inflation and slower growth.” His remarks underscore the mounting trepidation among investors as the market reacts to the Trump administration’s fluctuating trade policies.

The downward trend follows a period of strong retail spending in March, which marked the highest growth in over two years as consumers rushed to make purchases before the tariffs took effect. However, that surge now seems overshadowed by the uncertainty related to tariff increases.

Nvidia, a major player in the tech sector, saw its stocks plummet 6.87% after announcing it would take a hit due to new US government restrictions on exporting its artificial intelligence chips to China. This development reflects the growing tension between the US and China over AI technology, a battleground that has intensified since the arrival of emerging competitors like DeepSeek.

“While we expect that trade talks will ultimately yield progress, the brinkmanship between the US and China looks set to continue in the near term,” said Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, in a note on Wednesday.

After slight losses on Tuesday, Wall Street remained on edge, anticipating updates from the White House regarding trade policy. On Monday, the Trump administration initiated investigations into the imports of pharmaceuticals and semiconductor chips, potentially foreshadowing new tariffs.

President Trump indicated on Sunday that an announcement regarding the tariff rate on imported semiconductors is forthcoming, while mentioning there could be flexibility for certain companies within that sector.

The S&P 500 had seen its first back-to-back gain in two weeks earlier in the week following the announcement of tariff exemptions on electronics from China, as well as Trump’s considerations for automaker exclusions. However, the index remained lower both Tuesday and Wednesday, still trading below its closing price from April 2, prior to the initial tariff announcements.

“In the interim, if the recent flip-flopping around US tariffs and their implementation is anything to go by, the only certainty is that market participants will be forced to endure a period of extended market uncertainty,” analysts at Citi noted in a Monday report.

The World Trade Organization has projected a decline in global economic growth due to the trade war, estimating a 2.2% expansion in global GDP this year, a 0.6 percentage point adjustment lower than expected without additional tariffs.

In light of these developments, gold prices surged over 3% on Wednesday, reaching a new record high above $3,300 a troy ounce. Analysts at Goldman Sachs have adjusted their year-end price forecast for gold to $3,700, highlighting the growing demand for the precious metal as a safe haven amid ongoing economic and geopolitical tensions.