A one-day faceplant across markets certainly sends a message as to what Wall Street thinks of Donald Trump’s strategizing on global trade. Two days in a row, however, where the second day is even worse than the first, may be more of a warning that permanent damage is being done. 

The S&P 500 saw its worst two-day plunge in more than five years in a tariff-induced rout that torched $5 trillion in value, with the gauge down a tooth-snapping 6% on Friday after having dropped almost 5% the day before. Oh, and the Nasdaq 100? Bear market. 

The US administration, after having punched the world in the face, warned its victims not to punch back. The folks running the second-largest economy apparently didn’t get the memo though, retaliating against Trump’s tariffs with commensurate levies on all American goods and export controls on rare earths.

China will impose a 34% tariff on all imports from the US starting April 10, matching the level of Trump’s so-called reciprocal tariffs on Chinese products. Authorities in Beijing also announced other measures, piling on as the rest of the world began to position itself for a potential economic war with America. Some nations however were simultaneously preparing to negotiate. Trump reacted to Beijing’s clap back with one of his all-caps social media posts, claiming China had “panicked.”

But it wasn’t China who is being seen as the rash party. “The speed in which the counter measures were rolled out shows a high level of deliberation and a suite of appropriate responses to hit back at the US,” said Dylan Loh, assistant professor at the Nanyang Technological University in Singapore. “It strikes the balance between inflicting some pain but not being seen as a overreaction.” —David E. Rovella

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Billions of dollars worth of acquisitions and initial public offerings are on hold as Trump’s trade war twists the knife into a dealmaking market that had already struggled to get going this year. Ticket platform StubHub Holdings, fintech giant Klarna Bank and trading platform eToro Group are all said to have pressed pause on planned listings. Listings from adtech group MNTN and insurer Ategrity Specialty Holdings are also on hold. 

Bloomberg News reported Friday that French building materials producer Cie. de Saint-Gobain has decided to hold off on a sale of its auto glass unit, which could have fetched as much as €2.5 billion ($2.8 billion). And private equity firm KKR & Co. has walked away from a consortium discussing a takeover of Gerresheimer AG, the German maker of packaging for drugs and cosmetics that has a market valuation of about €2 billion.

Expectations for European Central Bank interest-rate cuts are rising as investors and analysts assessing the fallout from Trump’s tariffs conclude that the outcome for inflation will be more benign. Growth however will suffer. Two days after the 78-year-old Trump’s big tariff reveal at the White House, markets are pricing at least three more reductions in euro-zone borrowing costs this year—up from two before. Economists are growing more certain that the ECB will make the first of those moves in April.

Behind the shift is the view that Trump’s vastly higher levies will slow economic expansion more than spur consumer prices. Bloomberg Economics sees about 1% of European Union output at risk over the medium term, putting downward pressure on inflation. The dollar, meanwhile, has continued to defy the usual predictions that it would strengthen and is doing the opposite—damping fears that a softer euro would raise the cost of imports.

With Republicans planning to add trillions of dollars to the national debt by circumventing Senate procedure and declaring a $4 trillion tax cut to be actually free, business groups are scrambling to keep their piece of the pie. Lobbyists are mobilizing to crush a plan gathering momentum to curtail a heavily used federal income tax break that allows corporations to deduct state and local taxes. The proposal to cap or eliminate the so-called C-SALT deduction (not to be confused with the home game), which has especially miffed manufacturers, oil and gas producers and life insurers, is gaining traction with lawmakers as they search for ways to partially offset their giant tax package.

Ron Wyden  Photographer: Allison Robbert/Bloomberg

As for the substance of that GOP proposal, which also will raise the debt ceiling to accommodate Trump’s wishlist and avoid a fight before the midterms? Democratic Senator Ron Wyden of Oregon blasted the math and warned of cuts to social welfare programs. “No amount of gaslighting from Republicans about the true cost of their tax plan, now upward of $5 trillion, can hide the fact that they want to pay for handouts to billionaires and corporations by kicking millions of Americans off their health insurance, driving up child hunger and wiping out hundreds of thousands of jobs,” Wyden said.

The Trump administration reversed a proposal by former President Joe Biden allowing Medicare to pay for obesity drugs, a move that would have given millions of Americans access to the medications. The Centers for Medicare and Medicaid Services had been considering the measure, which could have expanded coverage of the costly drugs by classifying obesity as a disease. The drugs are widely seen by doctors as helping patients avoid other diseases caused in part by being overweight. Health and Human Services Secretary Robert F. Kennedy Jr., a vaccine skeptic with controversial views on health matters, has said there’s no need for them if Americans eat right. 

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