The U.S. stock market experienced another significant decline following President Donald Trump’s threat to impose steep tariffs on wine and other alcoholic products from the European Union. On Thursday, the benchmark S&P 500 fell by 1.39 percent, pushing the index into correction territory—a term used on Wall Street to describe a decline of 10 percent or more from its peak.
While market corrections are not uncommon, they can be unsettling for investors in the short term. The S&P 500 last entered correction territory in October 2023, when it dropped 10.3 percent from its July peak. The Dow Jones Industrial Average and the tech-heavy Nasdaq Composite also saw sharp declines, falling by 1.30 percent and 1.96 percent, respectively.
These latest losses mean that U.S. stocks have shed more than $5 trillion in market value since their peak in February. Trump’s unpredictable trade announcements have rattled markets, leaving investors uncertain whether his tariffs are permanent or merely a bargaining tactic to secure concessions.
“The main difference between the trade war under Trump 1.0 and Trump 2.0 is duration,” noted the Kobeissi Letter, a financial newsletter founded by Adam Kobeissi, on X. “In his first term, Trump’s tariffs were seen as more of a posturing tactic. This time around, markets are pricing in tariffs for longer on more trade partners. This is a material change.”
In his latest trade move on Thursday, Trump threatened to impose a 200 percent tariff on wine, champagne, and other alcoholic products from the EU. This came in response to the EU’s announcement of plans to impose a 50 percent tariff on U.S. bourbon whiskey starting April 1, which itself was a reaction to U.S. tariffs on steel and aluminum that took effect on Wednesday.
Earlier in the week, Trump withdrew a threat to impose a 50 percent tariff on Canadian aluminum and steel after the province of Ontario agreed to temporarily suspend a surcharge on electricity exports.
Despite the market turmoil, Trump and his aides have downplayed the situation, framing it as a transitional period for the economy. “I think this country is going to boom. But as I said, I can do it the easy way or the hard way,” Trump told reporters on Tuesday. “The hard way to do it is exactly what I am doing, but the results are going to be 20 times greater.”
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