U.S. Stocks Plunge as 'Sell America' Trade Resurges Amid Tariff Threats

Markets reacted sharply to President Donald Trump’s announcement of potential new tariffs targeting European Union imports, citing unfair trade practices and national security concerns. The S&P 500 tumbled 2.8%, shedding over 130 points, while the Nasdaq Composite fell 3.4%, its steepest drop since October 2025. The Dow Jones Industrial Average declined 2.1%, erasing gains from the prior week. The resurgence of the 'Sell America' trade—where investors divest U.S.-based equities amid geopolitical risk—reflects growing unease about escalating protectionism. This strategy, last seen prominently in April 2025 during a similar escalation with EU allies, has returned as investor sentiment shifts toward risk aversion. Sector-specific losses were pronounced: tech stocks dropped 3.9%, led by declines in semiconductor firms such as NVIDIA (-5.6%) and AMD (-4.8%), while consumer discretionary shares slid 4.2% under pressure from expected import cost increases. Global equity markets followed suit, with Germany’s DAX falling 3.1% and France’s CAC 40 dropping 2.7%. The euro weakened against the dollar, closing at $1.073, reflecting heightened uncertainty over transatlantic trade relations. Treasury yields rose modestly, with the 10-year yield climbing to 4.28%, signaling increased demand for safe-haven assets despite recent rate cuts. Investors are now reassessing exposure to multinational corporations with significant revenue tied to European supply chains, particularly in industrials and consumer goods. Market volatility indices surged, with the VIX jumping 24% to 21.5—the highest level since November 2025—indicating elevated expectations for future market swings.