Wall Street Expects Trump's 'Massive' Tariff Hike Threat Against China To Hurt US More, Says Expert: 'Dollar Is Not Looking Healthy'

Author: Rounak Jain | October 12, 2025 05:36am

President Donald Trump's "massive" tariff hike threat against China on Friday is seen as hurting the U.S. more.

Stock Market Fall Similar To Liberation Day Selloff

The U.S. equity markets tumbled on Friday after President Trump threatened to hit China with tariff hikes, with the three major indexes, the Dow Jones Industrial Average, S&P 500, and the Nasdaq Composite, all ending the day in red. The tech-heavy Nasdaq Composite registered the biggest fall among the three, tumbling 3.6%.

The S&P 500 declined 2.7%, registering its worst fall since April, when markets were on edge due to the "Liberation Day" tariffs.

U.S. On The Backfoot?

Robin Brooks, a senior fellow at the Brookings Institution, stated in a post on Substack that the markets view the U.S. as being at a disadvantage compared to China.

"Markets are again thinking that the US holds the shorter straw in the tariff fight with China," said Brooks.

"This is now the second instance where markets are trading tariffs as backfiring on the US, not on the rest of the world."

Vulnerable Dollar

The U.S. dollar index fell 0.7%, worse than the 0.4% decline on April 2 when President Trump first announced the "Liberation Day" tariffs. This takes the dollar index's year-to-date decline to nearly 9%, even as gold prices continue to roar with 53% YTD gains.

"Putting all this together, the Dollar looks more vulnerable now than it did in early April. The fall in the Dollar is bigger in absolute terms and when weighed against the sharp fall in the S&P 500, which should – ordinarily – drive safe haven buying of the Dollar," Brooks added.

"The fact that this didn't happen and that gold prices rose more than on ‘Liberation Day' is concerning. The Dollar is not looking healthy."

‘Hostile' China

In a post on Truth Social, Trump expressed concerns over China’s hostile actions, including their plans to impose export controls on rare earth elements, which are crucial for various industries.

"It has just been learned that China has taken an extraordinarily aggressive position on Trade in sending an extremely hostile letter to the World," Trump said.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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