"Worst Scenario Realized"...U.S. Stock Market 'Panic' in After-Hours Trading Due to Reciprocal Tariffs

The New York Stock Exchange is plummeting in after-hours trading following the announcement of the U.S.'s more aggressive than expected reciprocal tariff policy.

In the regular trading session that closed just before President Donald Trump imposed the reciprocal tariffs, the market closed higher in anticipation of uncertainty being resolved.

In after-hours trading on the 2nd (local time), the Dow Jones Industrial Average futures are down about 2.7%. The Standard & Poor's (S&P) 500 futures and Nasdaq 100 futures are also plunging by 3.9% and 4.7%, respectively.

Tesla, which surged 5% in the regular session, gave back all its gains in after-hours trading.

Nike and Gap, which import clothing produced overseas into the U.S., are also down about 7% and 12%, respectively, in after-hours trading.

Apple and Nvidia, which import IT products and semiconductors produced in Greater China, are also down 6% and 4%, respectively.

Five Below, which sells imported products, is plummeting by 11%.

Earlier in the regular session, the Dow rose 0.56%, the S&P 500 rose 0.67%, and the Nasdaq rose 0.87%. The rise was in anticipation of uncertainty being resolved following President Trump's announcement of reciprocal tariffs right after the regular session closed.

However, the complexity of the tariff imposition and the higher-than-expected tariff rates are leading to a sell-off in after-hours trading.

After the regular session closed, the Trump administration announced a 10% universal tariff on all trading partners and additional reciprocal tariffs based on the tariffs imposed by each country on U.S. goods.

Particularly for China, the White House explained that the effective tariff rate would reach 54%, as reported by CNBC. This calculation adds the newly introduced reciprocal tariff rate to the existing tariff rate.

Initially, the market expected a total tariff rate of 10-20%, but the tariff rates for most countries exceeded 20%. South Korea is at 25%, Japan and the European Union are at 24%, etc.

However, President Trump argued, "We are imposing about half of the tariffs they (trading partners) impose on us," adding, "This is not a complete reciprocal tariff."

Wall Street experts are in panic.

There is concern about the increased uncertainty due to the complexity of the tariff imposition. Art Hogan, chief market strategist at B. Riley Wealth Management, said, "This announcement is one of the most confusing measures this administration has put forward so far," adding, "The added complexity and higher-than-expected tariff rates have not yet been reflected in the market."

There is also concern about the possibility of an economic downturn due to the imposition of high tariffs. If tariffs cause prices to rise again in the U.S., it could suppress consumption. Larry Tentarelli, chief technical strategist at Blue Chip Trend Report, said, "If a 10% tariff rate had been announced, the market might have actually risen," adding, "Because much stronger tariff measures than expected have been announced, volatility will increase in the short term."

Park Sang-hyun, a researcher at iM Securities, evaluated this reciprocal tariff announcement as "the worst scenario realized." He said, "The variable to watch in the future is individual negotiations with the U.S., and major countries will begin negotiations in earnest to lower the reciprocal tariff rates," adding, "There is potential for some countries' tariff rates to be slightly adjusted downward."

Han Kyung-woo, Hankyung.com reporter case@hankyung.com