Tariff Threats Rattle Markets as Tech and China-Exposed Stocks Tumble

Wall Street closed sharply lower Friday after President Donald Trump highlighted trade tensions with China, triggering a broad market selloff that shattered a month-long stretch of calm.

The Dow Jones Industrial Average sank 878.82 points, or 1.9%, to 45,479.6. The S&P 500 dropped 182.61 points (−2.71%) to 6,552.50, while the Nasdaq Composite tumbled 820.19 points (−3.56%) as technology stocks bore the brunt of the losses. The Russell 2000 fell 3% to 237.78.

The selloff followed Mr. Trump's declaration on Truth Social that he planned a “massive increase of tariffs” on Chinese imports and would cancel his planned meeting with President Xi Jinping at the APEC summit later this month. The statement—issued in response to Beijing’s new export restrictions on rare earth minerals—shook investor confidence and revived fears of a renewed trade war between the world’s two largest economies.

“There is no way that China should be allowed to hold the world ‘captive,’” Mr. Trump wrote, adding that his administration was considering “many other countermeasures” against Beijing’s tightening grip on rare earth exports.

Tech and China-Linked Stocks Lead Declines

Semiconductor and high-growth technology shares led Friday’s retreat. The SMH ETF fell 4.5%, ARK Innovation (ARKK) dropped 6%, and solar and clean-energy funds tumbled more than 6%. U.S.-listed Chinese firms including Alibaba, Baidu, and JD.com each lost more than 5% as traders priced in potential retaliation from Beijing.

Retailers were also hit as renewed tariff fears threatened supply chains ahead of the holiday season. Shares of Best Buy and American Eagle each fell 4%, while Nike and Lululemon lost around 2%.

Commodities and Safe Havens Diverge

Crude oil futures for November delivery dropped 4.28% to $58.88 per barrel, their steepest one-day decline since July, as traders braced for global growth risks. In contrast, gold surged 1.27% to $4,023.10, with investors piling into traditional safe havens. Treasury ETFs also advanced, led by TLT (+1.4%), as yields fell.

Analysts Eye Buying Opportunities

Despite the rout, some analysts see the pullback as a temporary reaction. Wedbush Securities’ Daniel Ives called the episode “a white-knuckle moment for markets,” but argued that “the bark will likely be worse than the bite this time around,” viewing the downturn as an opportunity to accumulate long-term winners in semiconductors, software, and AI.

Wedbush maintained “Outperform” ratings on Nvidia, Microsoft, Palantir, Meta, Alphabet, and Amazon, projecting gains of more than 7% into year-end as the AI-driven industrial cycle gathers pace.

Outlook

While Friday’s selloff was triggered by rhetoric rather than formal policy, investors remain wary of further escalation ahead of the APEC summit. “Mutually assured disruption is no longer a metaphor,” one analyst said, warning that both Washington and Beijing appear willing to weaponize economic tools simultaneously.

For now, the market’s message is clear: the summer’s tranquility has ended, and the trade war ghost has returned to haunt Wall Street.