In short: President Trump announced sweeping reciprocal tariffs on most US trading partners on April 2, dubbed "Liberation Day." Markets immediately priced in a global trade war, slower growth, and higher inflation. The S&P 500 fell roughly 10% over two days — one of the steepest short-term selloffs in years.
On April 2, 2025, the Trump administration unveiled a broad tariff package affecting most countries the US trades with. The tariff rates were framed as "reciprocal" to match what those countries charge on US goods. Key rates announced included a 34% tariff on Chinese goods (on top of existing tariffs), 20% on the EU, 24% on Japan, and a 10% baseline on most other nations.
The announcement far exceeded what markets had been expecting. Prior to the announcement, investors had largely priced in narrower, targeted tariffs. The breadth and magnitude of the actual policy triggered an immediate repricing across global markets.
Tech stocks with heavy China exposure led the selloff:
On April 9, 2025, the White House announced a 90-day pause on most reciprocal tariffs, with the notable exception of China (where tariffs were actually raised). Markets staged a dramatic reversal — see: Why Did Stocks Rally on April 9, 2025?
The April 2025 selloff was a reminder of how quickly trade policy can move markets. The event reinforced that geopolitical and policy risk — not just earnings or Fed policy — can be the dominant driver of short-term price action. For real-time explanations of current moves, use ExplainThisMove.