U.S. stock markets experienced significant declines with the Dow Jones falling by 2.08%, the S&P 500 by 2.69%, and the Nasdaq by 4%, marking the steepest drop in two years.

This downturn coincides with the implementation of new tariffs from China, which impose a 15% levy on nearly all U.S. agricultural goods, further exacerbated by Donald Trump’s recent comments regarding potential economic recession.

Major European indices also registered losses, with Milan's Ftse Mib down 0.95%, London's FTSE 100 declining by 0.92%, Germany's DAX falling 1.8%, and France’s CAC 40 decreasing by 0.9%.

The decline in Wall Street is attributed to several factors, particularly increasing investor unease over the impact of Trump's tariff policies.

Analysts highlight that China has warned it will endure prolonged economic strain rather than concede to U.S. demands.

Beijing has implemented tariffs on American chicken, wheat, corn, and cotton at 15%, while soybeans, pork, and various fruits and vegetables face a 10% tariff.

The United States exports a significant portion of its agricultural production, with about 20% of U.S. agricultural output sent to China, which has an agricultural market valued at approximately $1.5 trillion, contributing nearly 6% to the U.S. GDP.

Following recent economic data and Trump's administration announcements, analysts at Goldman Sachs have revised U.S. growth forecasts down from 2.4% to 1.7% amid fears surrounding these tariffs.

This revision reflects growing concerns about U.S. trade policy rather than recent economic performance, which still shows growth and low unemployment.

While inflation is under control, nearing an aim of 2%, uncertainties stemming from Trump's trade policies have impacted investor confidence.

Meanwhile, Trump has emphasized the necessity of maintaining a strong economy over stock market performance.

In technology, Wall Street's anxiety was reflected in significant losses among leading firms known as the 'magnificent seven'.

Tesla shares plummeted over 15%, marking its biggest decline since 2020, while companies like Alphabet, Meta, and Nvidia suffered drops of around 5%.

Palantir Technologies, backed by Trump supporter Peter Thiel, fell by more than 10%.

The White House characterized the stock market's decline as distinct from the broader economic conditions, stressing that corporate performance may present a more optimistic picture than stock valuations suggest.

The looming threat of a government shutdown—a potential halt in federal operations due to a lack of funding—also remains a critical issue.

Republican leaders are negotiating to avert a shutdown, with a bipartisan proposal for a six-month funding extension expected to be put to a vote in the House.

If passed, it would need to secure a supermajority in the Senate, requiring at least seven Democratic votes to succeed.

Current negotiations are fraught with tension, particularly over military spending increases counterbalanced by cuts elsewhere, making bipartisan agreement challenging.

In European markets, similar reactions were observed, with the Stoxx 600 index dropping by 1.3% and erasing approximately €279 billion in market capitalization.

Italy's Ftse Mib index fell by 1.38%, resulting in losses of about €12.52 billion.

Overall, global investors are facing heightened volatility and uncertainty fueled by the U.S.-China trade tensions and domestic economic signals.