Washington, DC – March 12: President Donald J Trump met with Ireland’s Prime Minister Michael Martin in the Oval Office on Wednesday, March 12, 2025, as trade relations between the U.S. and China continue to impact the stock market.

Stock futures have sharply declined as the escalating trade tensions between the United States and China take center stage. Following China’s announcement of retaliatory tariffs on U.S. goods, the Dow Jones Industrial Average futures dropped around 700 points, translating to more than a 1.5% drop in the market.

In detail, S&P 500 futures slid by 1.4%, and Nasdaq-100 futures fell back by 1%. China’s retaliation includes an alarming 84% levy on U.S. goods, coinciding with the start of U.S. tariffs on Chinese imports, which stand at a staggering 104%.

This sharp increase has led to significant losses for major U.S. companies. For instance, Apple shares dropped by as much as 2% in premarket trading, before recovering slightly. Similarly, Ford Motor and General Motors also saw declines, decreasing by over 2% and 1%, respectively.

“Our base case is that tariffs will drift lower over time but remain at historically high levels,” noted Piper Sandler analyst Andy Laperriere in a recent commentary. He added that while some minor deals could emerge, the near-term outlook suggests further increases in tariffs.

As anxiety around these tariffs builds, the ongoing volatility in the stock market has persisted, resulting in a four-day sell-off phase. The S&P 500 had moments of recovery, posting gains of more than 4%, before closing with a 1.6% loss, while the Dow saw a similar trajectory.

The financial landscape appears grim, with the S&P 500 now hovering dangerously close to bear market territory, just inches away from a bear market designation, defined by a decline of 20% from a previous high. Currently, the index requires only a further 1.35% slip to officially enter bear market conditions.

As European markets opened lower, the pan-European Stoxx 600 dipped by 2.7% shortly after the bell. With all regional sectors firmly in the red, the healthcare, auto, and mining sectors experienced significant losses.

Amid these tumultuous market conditions, analysts are voicing their concerns regarding the bond market, citing troubling swings in Treasury yields. The benchmark 10-year Treasury note yield surged to 4.374% this week, raising alarms about market functionality. Gregory Faranello from AmeriVet Securities emphasized the repercussions of such fluctuations, stating, “Ultimately, if the U.S. Treasury market doesn’t function, we have issues.” He noted parallels between current tensions and the 2008 financial crisis, with trust issues affecting international trade.

The gold market is also experiencing volatility, with prices climbing after a brief downturn. Analysts from Julius Baer suggest that despite recent fluctuations, a structural bull market for gold remains intact, driven by central bank buying and heightened trade conflict.

As the situation develops, investors are urged to stay informed and ready for potential market shifts, particularly with global trade dynamics in constant flux. Investors may need to adapt to an ever-changing financial environment. Will this trade war determine the next trajectory for global markets?