On April 7, 2025, global stock markets were hit by massive selloffs triggered by new trade tariffs announced by U.S. President Donald Trump. The S&P 500 Index dropped 2%, nearing a 20% decline from its February high — officially marking the onset of a bear market for the first time since 2022. Since the beginning of the decline, the index has lost more than $9 trillion in market capitalization.

The trade war launched by the United States is rapidly unraveling supply chains and igniting panic among investors. Following Trump’s announcement of tariffs ranging from 10% to 50% on imports from 211 countries and territories — including the EU, China, Canada, and Mexico — global markets reacted with sharp declines. China retaliated on April 4 with 34% tariffs on U.S. imports, escalating tensions further.

Global Selloffs: Scope of the Damage

The panic began in Asia, where Japan’s Nikkei dropped 7.83%, TOPIX fell 7.79%, and Hong Kong’s Hang Seng plunged 13.22%. European markets opened deep in the red: Germany’s DAX 40 dropped 10.42%, and the UK’s FTSE 100 fell 6.33%. In the U.S., futures on the S&P 500 and NASDAQ 100 sank 5.02% and 5.83%, respectively.

Volatility spiked dramatically: the VIX “fear index” surged above 60 — three times its historical average. Investors rushed to safe havens such as U.S. Treasuries and the Japanese yen, abandoning risk assets en masse.

Sectors Hit the Hardest

The tech and consumer discretionary sectors bore the brunt of the selloff. Shares of Super Micro, Micron, and On Semiconductor fell more than 37%, Tesla dropped 35%, and Nvidia 32%. Airlines and cruise lines such as Delta and Norwegian lost over 40%.

Even the so-called “Magnificent Seven” — the U.S.’s flagship tech companies — couldn’t hold the market: Apple dropped 7.7% due to projected margin pressure from higher production costs in China.

Psychology and History Point to a Prolonged Recovery

Historically, bear markets last an average of 13 months with the S&P 500 losing around 32%, according to CFRA data. If this trend holds, markets might not reach new highs until March 2026. Of the past 14 bear cycles since World War II, only three ended in under four months.

JPMorgan warns that if tariffs persist, the U.S. and global economy could slip into recession by the end of the year. Inflation could rise by 1.5%, while household incomes and spending would likely decline. This scenario could wipe out much of the S&P 500’s projected earnings growth.

Investors Shift Away From U.S. Assets

Amid the uncertainty, investors are rotating into European stocks, which are perceived as more stable. Within the U.S., there’s a clear flight from growth stocks toward value stocks, which just had their best quarter versus growth since 2022. According to JPMorgan and Fidelity data, even retail investors — typically the last to panic — are starting to crack. The American Association of Individual Investors’ latest survey shows bearish sentiment near record levels.

Other Disruptions Fuel the Fire

Additional turmoil is hitting sentiment. Elon Musk’s controversial efforts to reform federal agencies under the Trump administration are starting to impact job numbers, while the emergence of Chinese AI startup DeepSeek is challenging the assumption that U.S. AI giants deserve premium valuations.

Conclusion: The Worst May Be Ahead

The continued decline in equities, exacerbated by political instability and geopolitical risks, threatens to transform the recent bull market into one of the shortest in history. Without a breakthrough on trade negotiations, the U.S. could slide into a full-blown recession, and global markets could be headed for a prolonged crisis.