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Friday morning, the S&P 500 was sitting just shy of another record high — until one social media post from President Donald Trump sent shockwaves through the markets, erasing $2 trillion in value within hours.
That sudden drop was a reminder of how much the global economy still danced to the tune of Trump’s one-man trade policy.
Trump at 10:57 a.m. ET wrote on his Truth Social platform that China was “becoming very hostile” with the rest of the world, especially when it comes to its control of rare earth metals. He accused China of holding the world “captive” because of its “monopoly” on these crucial resources.
The key part that the stock market reacted to in the 500-word Trump post was this: “One of the policies that we are calculating at this moment is a massive increase of tariffs on Chinese products coming into the United States of America.” (CNBC / @johnmelloy)
That’s all it took.
According to Bespoke Investment Group, roughly $2 trillion vanished from the U.S. stock market after that single post. By the end of the trading day, the S&P 500 had dropped 2.7% — its steepest fall since early April, when markets were already reeling from Trump’s “liberation day” move to slap unexpectedly high tariffs on nearly every nation worldwide.
The Nasdaq Composite — packed with tech giants deeply tied to trade with China — tumbled 3.56%, marking its worst day since April. Ironically, it had just hit an all-time high earlier that same Friday, right before Trump’s post sent it spiraling.
The Dow Jones Industrial Average
dropped 879 points, or 1.9% for its worst performance since May. The Russell 2000 small-cap benchmark shed 3%.
So why the sudden crash?
Until that moment, most investors believed the U.S. and China were inching toward a deal — slow progress, sure, but progress nonetheless. The general feeling was that tensions were easing and that Trump’s upcoming meeting with President Xi Jinping at the APEC summit later this month would help patch things up.
That fragile optimism shattered the instant his post hit.
The market had also become comfortable with the around 40% tariff rate already applied to China, reasoning that the U.S. economy was stronger than previously thought to withstand it, and exemptions for products made in China — like Apple’s
iPhones — were broad enough to soften any economic impact.
If Trump actually makes good on his latest threat, investors worry the strain could be too heavy for the U.S. economy to handle — one still dependent on imported components to build everything from cars to solar panels.
But what really keeps Wall Street up at night isn’t just the tariffs themselves — it’s the possibility of China striking back, setting off a full-blown trade war with no clear way out.
