US stock markets fell sharply on Friday after President Donald Trump threatened a “massive increase of tariffs on Chinese products,” accusing China of “becoming very hostile” with its restrictions on rare earth metals.
The metals are critical for both the tech and defense industries, and the remarks immediately triggered a broad market sell-off, erasing early gains.
The Whitehouse also responded to the Nobel Committee’s decision to award the 2025 Nobel Peace Prize to Venezuelan opposition leader Maria Corina Machado instead of President Donald Trump.
Meanwhile, the US consumer sentiment worsened as the government shutdown continued.
Stocks drop sharply after tariff warning
The Dow Jones Industrial Average fell 878 points, or 1.9%, marking its largest decline since June 13.
The S&P 500 dropped 2.7%, while the Nasdaq Composite fell 3.5%.
Prior to Trump’s comments, stocks had been trading higher, with the Nasdaq even reaching a new intraday all-time high.
Trump stated on Truth Social that he had planned to meet Chinese President Xi Jinping at the upcoming APEC summit in South Korea, but added that “there seems to be no reason to do so.”
He warned that “a massive increase of tariffs on Chinese products coming into the United States of America” is among the measures under consideration.
Shares of tech companies most exposed to Chinese trade suffered significant losses.
Nvidia dropped more than 3%, AMD fell over 6%, and Tesla shed more than 4%.
Meanwhile, US crude oil prices declined amid concerns that higher tariffs could weigh on global demand.
White House criticizes Nobel Peace Prize decision
The White House sharply criticized the Norwegian Nobel Committee’s decision to award the 2025 Nobel Peace Prize to Venezuelan opposition leader Maria Corina Machado instead of President Trump.
White House spokesperson Steven Cheung praised Trump’s efforts in peace deals and humanitarian work, saying, “There will never be anyone like him who can move mountains with the sheer force of his will.”
Machado was recognized for her advocacy for democratic rights in Venezuela and her efforts to achieve a peaceful transition from dictatorship to democracy.
She has faced imprisonment, disqualification from public office, and threats from Venezuelan authorities, highlighting the risks faced by pro-democracy leaders in the region.
Consumer sentiment falls amid government shutdown
The ongoing US government shutdown has weighed on consumer confidence.
The University of Michigan’s Consumer Sentiment Index for October 2025 slipped slightly to 55, down from 55.1 in September.
While the decline is modest, it reflects continued caution among households amid high inflation and uncertain job prospects.
Economists noted that the shutdown is causing delays in key federal data releases, including jobs reports, retail sales, and GDP figures.
These delays hinder both market participants and policymakers from fully assessing the economic landscape, contributing to uncertainty.
More than 250,000 federal workers have missed paychecks due to the shutdown, with economists estimating that each week the closure continues could shave 0.1 to 0.2 percentage points off US GDP growth.
The uncertainty has prompted investors to shift toward safer assets, with treasury yields declining slightly as caution rises.
US troops deployed to Israel for Gaza coordination efforts
On the international front, the US has begun deploying troops to Israel to establish a civil-military coordination center in connection with the ongoing Gaza ceasefire.
Approximately 200 service members are being sent to assist with humanitarian, logistical, and security operations.
Officials clarified that no personnel will enter Gaza directly, and the hub is expected to take several weeks to become fully operational.
The combination of geopolitical tensions, domestic political gridlock, and market volatility underscores the fragile environment facing investors, consumers, and policymakers alike.
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