Trump Trade War Triggers Market Crash

NEW YORK, TUESDAY—The stock markets in the United States and various countries plummeted amid recession fears triggered by the trade war initiated by Donald Trump. Seven major stocks on Wall Street dragged down the market, including cryptocurrencies.

At the close of trading on Monday evening (10/3/2025) New York time or early Tuesday morning WIB, all stock and commodity indices on the U.S. exchange plummeted. The S&P 500, Dow 30, Nasdaq, and Russell 2000 dropped by more than two percent. Nasdaq suffered the worst, plunging by four percent. This marks the steepest decline since 2022.

The decline in the US stock market was partly driven by seven major technology company stocks, known as the "Magnificent Seven." These stocks include Nvidia, Tesla, Alphabet, Amazon, Meta, Apple, and Microsoft. Tesla's stock, one of the companies controlled by Elon Musk, experienced the sharpest correction, falling by 15.43 percent.

Since Trump won the U.S. election on November 5, 2024, Tesla's stock has continued to decline. Musk openly supported and later became part of the Trump administration. Over the past four months, Tesla's highest recorded price was $481 per share on December 17, 2024. By the close of trading on March 10, 2025, its price had dropped to $222.15 per share.

Not only in the US, the market correction was also experienced in Europe and Asia. Except for Japan, the decline in European and Asian stock markets was not as severe as in the US market. In Asia, Japan's Nikkei performed the worst, plunging 2.23 percent after losing 824.57 points at the opening of trading on Tuesday.

A massive correction is also observed in the cryptocurrency market. Currently, each bitcoin is traded at 77,080 US dollars. On March 2, 2025, its price reached 94,423 US dollars. Over the past month, the price of bitcoin has decreased by 19.68 percent.

Ethereum fared even worse, losing 30.3 percent in the past month. In Monday's trading, Ethereum closed down 10.94 percent to 1,814 US dollars.

In fact, Trump's victory was once greeted with great joy by cryptocurrency market players. The market became even more lively when Trump announced that the US would create a cryptocurrency reserve. However, in just a matter of days, the prices of various cryptocurrencies were corrected again.

The market reacted negatively after Trump refused to deny the possibility of a recession in the US. The possibility is feared to be open due to supply chain disruptions triggered by Trump's trade war.

Despite the back and forth, Trump imposed import duties (IDR) on commodities from several major US trading partners. In return, US trading partners also imposed IDR on various US commodities.

Trump argued that BMI would force manufacturers to open factories in the US. A number of manufacturers have indeed announced billions of dollars in investments to avoid BMI on their products to the US. White House spokesman Kush Desai even said that the total investment commitment since Trump was inaugurated has reached trillions of dollars.

On the possibility of a recession, Trump said the US is in a transition period. In that period, some things may be painful. "I hate to predict things like that," he said when asked about the possibility of a recession.

US Treasury Secretary Scott Bessent said the US economy is in the process of cleaning itself up. US companies have been seen as overly dependent on government spending.

In the Trump era, government spending is being reduced. Trump is also encouraging deportations of immigrants and reducing the federal civil service.

However, the market thinks otherwise. BMI will increase selling prices for both export and import commodities. When prices rise, consumption tends to slow down. As a result, producer and distributor incomes also decrease. The potential for reduced income could cut shareholder dividends.

Therefore, investors consider it better to release shares immediately than not getting a decent dividend. If investors do that in droves, then the stock price will be corrected.

Investors don't just consider BMI. Unemployment data is also a concern. Reducing civil servants means increasing the number of people who lose income. People who lose income tend to hold back consumption.

Mass deportations are also a problem. Because, so far, immigrants have been one of the sources of labor in the US. Deportations have caused various sectors to lack workers who can be paid cheaply. Various sectors will only be able to recruit workers with higher wages. This means increased expenses for producers or distributors and ultimately can cut their profits.

The combination of factors has led many to cut their projections for U.S. economic growth. Goldman Sachs analysts cut their projections from 2.2 percent to just 1.7 percent. "The market is concerned about tariffs," said Chris Larkin, Managing Director of Morgan Stanley's E-Trade. (AP/REUTERS)