President Donald Trump’s latest round of tariffs has sent shockwaves through financial markets, with US assets taking a significant hit compared to other major economies. The move, announced after markets closed on Wednesday, triggered a sharp selloff in equity index futures, a slump in the dollar, and a downturn in Treasury yields.

US Markets React Sharply

US equity index futures plunged more than 4% following the announcement, highlighting investor anxiety over the economic implications of the protectionist policies. The S&P 500, already struggling in 2025, is now under further pressure, deepening concerns about inflation and recession risks. Tech-heavy Nasdaq 100 has also seen a notable decline, adding to fears of prolonged market volatility.

Global Markets Less Affected

While the US bore the brunt of the fallout, European and Asian markets reacted with less severity. The Stoxx Europe 600 fell 1.9%, while the euro gained 2.2% against the dollar, reaching its highest level since October. Asian markets also experienced losses, but they remained relatively contained at a 1.7% decline.

Neil Birrell, Chief Investment Officer at Premier Miton Investors, emphasized the shifting perception of US assets among global investors. “Would international investors sell the US as a result of this and start moving money? Yes, they probably will,” he remarked.

Dollar Loses Its Safe-Haven Appeal

One of the most significant developments was the dollar’s sharp decline, marking its worst trading day in over two years. Traditionally, the greenback benefits during periods of market turbulence, but this time, the response was different. The Japanese yen, another safe-haven currency, strengthened by 1.9%, while US Treasury yields dropped to their lowest levels since October, further pressuring the dollar.

Ray Attrill, head of foreign-exchange strategy at National Australia Bank Ltd., noted, “The aggravation of US growth concerns on the tariff news and related further falls in US stocks has meant that the dollar isn’t enjoying its traditional safe-haven, reserve currency status support.”

Long-Term Implications

The US stock market was already struggling before the latest tariffs, with the S&P 500 down 3.6% for the year and the Nasdaq 100 shedding about 7%. In contrast, Germany’s DAX index has surged 10% in 2025, illustrating the growing divergence in global market performance.

Investor sentiment appears cautious, with many hesitant to “buy the dip.” Aneeka Gupta, head of macroeconomic research at Wisdom Tree UK Ltd., observed, “Investors are turning toward income as a source of refuge in these times of uncertainty as they wait and watch how countries essentially come back with their countermeasures.”

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