05/04/2025
WHY AMERICAN STOCK MARKET HAS CRASHED.
The American stock market has likely crashed due to a combination of economic uncertainty and policy shifts, particularly related to the Trump administration’s aggressive tariff policies. In early 2025, reports indicate that the S&P 500 and other major indices, like the Nasdaq and Dow, saw sharp declines, with the S&P 500 dropping over 10% in just two days following the announcement of new tariffs on April 2, 2025. This rapid sell-off erased trillions in market value up to $5 trillion according to some sources driven by fears of an impending recession.
A key trigger appears to be the imposition of hefty tariffs on major trading partners like Canada, Mexico, and China, followed by retaliatory measures from these countries. These trade policies, including reciprocal tariffs set to take effect, have spooked investors by raising the prospect of higher costs for businesses, disrupted supply chains, and increased inflation. For instance, companies like Walmart warned of passing tariff-related costs onto consumers, which could dampen spending—the backbone of U.S. economic growth. This uncertainty has led to a “de-risking” wave, with investors pulling out of high-growth sectors like technology, causing sharp drops in stocks like Tesla and Nvidia.
Additionally, broader economic signals have fueled the crash. Consumer sentiment has plummeted to its lowest since late 2022, and forecasts from institutions like Goldman Sachs have downgraded U.S. GDP growth expectations for 2025, citing tariffs as a major headwind. The Federal Reserve’s response or lack thereof has also been a factor; with inflation concerns lingering, anticipated interest rate cuts may be delayed, further pressuring stock valuations that were already seen as stretched after years of strong gains.
Historically, the market has weathered crashes before 15 times in the last century, per some analyses and recovered each time.
However, the immediate cause of this crash seems
