Stock Market Collapse Possibility on Wednesday
The stock market is bracing for a potential crisis, as ominous clouds gather over its horizon. By midweek, the DAX and other global indices could be reeling, and it's crucial for investors to stay informed.
On Monday itself, the DAX and international indices took a substantial hit. This temporary plunge might just be a prelude to a more significant collapse, slated for Wednesday. And at the heart of this looming crisis is US President Donald Trump.
Are tariffs set to precipitate a stock market crisis?
The 2nd of April – that's Wednesday – has been marked by Donald Trump for imposing new tariffs. These could extend far beyond the car tariffs already known and cover a multitude of product categories. The specifics, such as the magnitude of the tariffs, remain unclear, but Trump has already dubbed the forthcoming Wednesday as "America's day of emancipation."
However, critics see an intensifying trade war on the horizon. Even seasoned financial experts stress the gravity of the situation. Goldman Sachs, for instance, has bulked up its stock provisions, reflecting a gloomy outlook. "April 2nd, 2025, might go down in history as the day that marks the end of an era that has lasted since World War II: that of largely liberal world trade," warned the Landesbank Hessen-Thüringen (Helaba), among others.
Can stocks weather the storm?
Given that even Donald Trump himself appears to be willing to tolerate stock market setbacks for his economic agenda, investors can brace for a tumultuous week starting from Wednesday. Nevertheless, experts believe that significant market declines are unlikely as long as the details about the tariffs remain obscure.
Investors should, however, prepare for a prolonged period of sideways movement. Initial shock from Trump's tariffs on Wednesday might unnerve many investors, but history suggests that Trump has also reneged on some announcements in the past. This unpredictable environment may not be conducive for investors, but a crash isn't the only possibility.
Historically, major trade tensions have led to stock market turbulence. For example, the trade feud between the U.S. and China during the Trump presidency (2017-2021) caused intermittent stock market instability.
The recent announcement of tariffs on April 2, 2025, includes a 25% tariff on imports from countries purchasing Venezuelan oil, among other measures. Such actions could exacerbate trade tensions and impact global trade dynamics.
While it's hard to foresee specific outcomes, the imposition of tariffs could intensify uncertainty and volatility in the stock market, potentially precipitating a crisis if other economic factors are adverse. However, the actual impact will depend on how these tariffs are implemented, the reactions of other countries, and the broader economic landscape at the time.
- Amid the scheduled imposition of new tariffs by Donald Trump on April 2nd, investors are questioning whether stocks can weather the storm, especially considering history has shown that major trade tensions can lead to stock market turbulence.
- With the potential implementation of a 25% tariff on imports from countries purchasing Venezuelan oil, the announced tariffs could exacerbate trade tensions, heightening uncertainty and volatility in the stock market, and potentially precipitating a crisis if other economic factors are unfavorable.
