Wall Street, New York Stock Exchange (NYSE), New York City, USA. file | Photo courtesy: Reuters
Investors worry that Wall Street’s record stock rally will soon fade after tariffs re-emerged as a market risk on Friday (Oct. 10, 2025). US equity markets fell nearly flat during the trading session, off record highs in mid-week, after President Donald Trump revived threats to raise tariffs against China. Investors are worried that a potential tit-for-tat trade drama between the world’s two largest economies could spell the end of a record-breaking rise in US equities.
Mr Trump, who was due to meet Chinese President Xi Jinping in South Korea in about three weeks, questioned whether there was any reason for the meeting to take place and complained on social media on Thursday (Oct 9, 2025) about China’s plans to hold the global economy hostage after dramatically expanding its rare earth export controls.
Late on Friday (October 10, 2025), after Wall Street’s official trading session ended, Mr Trump said he would impose additional 100% tariffs on imports from China on November 1, as well as export controls on critical US-made software. The Republican president said he had not canceled a meeting with Mr Xi, but his tariff threats sent shares in the market giant falling.
Nvidia, Tesla, Amazon.com and Advanced Micro Devices all fell more than 2% after the bell.
Tariff talks send market into decline
During the regular trading session, Wall Street stocks had already sold off sharply. The Dow Jones Industrial Average closed down 1.90% while the S&P 500 closed down 2.71%, and the Nasdaq Composite fell 3.56% on the day. The S&P 500 and Nasdaq posted their biggest single-day percentage declines since April 10, 2025.
The selloff stems from concerns that high stock market valuations driven by enthusiasm over artificial intelligence (AI) could lead to a significant decline. The S&P 500 and Nasdaq hit record highs on Thursday (Oct. 9, 2025) and are up 11% and 15%, respectively, in 2025. The Dow has gained about 7% so far. Skyrocketing valuations have evoked memories of the dotcom bubble of the late 1990s which burst in 2000.
JPMorgan Chase CEO Jamie Dimon, in a BBC In an interview on Wednesday (October 8, 2025), Wall Street warned of a growing risk of a significant correction within the next six months to two years. “With equities at high valuations, this selloff is a sign of panic,” said Gene Goldman, chief investment officer at Cetera Investment Management. “Everything is priced to perfection, so uncertainty increases market jitters. All this adds uncertainty to economic growth.”
In April 2025, Mr. Trump’s announcement of what he called the Liberation Day tariffs stunned markets and rattled investors, causing a total decline of $2.4 trillion in the market value of S&P 500 companies. However, some investors argue that the latest US-China trade tensions are unlikely to significantly alter market momentum, as AI remains the primary driving factor.
“It’s certainly an important issue, and it may require a pullback, but I don’t think it will derail the AI theme driving the market,” said James St. Aubin, chief investment officer at Ocean Park Asset Management.
published – October 11, 2025 11:19 am IST
