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Stocks fall as tariffs hurt tech stocks

Stocks plunged, bonds surged and the dollar rose on Thursday, as U.S. president Donald Trump announced an even larger-than-expected wall around the largest economy in the world, disrupting trade and supply chain.

Nasdaq Futures fell 4%. Tech was on the frontline because China, which has been hit with an additional 34% tariff on top of its previous 20%, is a major manufacturing hub. Apple shares fell nearly 7% after-hours.

S&P futures declined 3.3%, while Nikkei Futures fell more than 4%. Australian shares fell 2%.

The U.S. Dollar was higher on a rollercoaster of currency trading, except for the safe-haven Japanese yen that surged up to 148.15 dollars per yen.

Fears of an economic slowdown in the United States pushed gold to record highs. U.S. Treasury Futures also soared. Oil, which is used as a proxy to measure global growth, dropped more than 2%, leaving U.S. crude oil futures at $69.73 per barrel.

Trump announced an import tariff of 10%, with much higher rates for some trading partners in Asia.

In addition to China's 34% tax on imports, Japan received a 24% duty, Vietnam 46%, and South Korea, 25%. The European Union received a 20% tax.

Van Eck's Vietnam ETF dropped more than 8% after-hours.

Trump has also closed a loophole that was used to ship low value packages from China. This is likely to hurt China’s giant online retailers.

Trading partners will likely respond with their own countermeasures that could result in dramatically higher prices.

Analysts at Wedbush said that the tariffs were worse than what the Street had feared. The technology supply chains in Taiwan and China have been hit hard.

Investors priced in a slower U.S. economy and an increased chance of rate reductions.

Tony Sycamore, IG's market analyst, said that the tariff rates announced this morning were far above expectations. If they are not negotiated down quickly, then expectations of a U.S. recession will increase dramatically.

(source: Reuters)