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A Black Monday born of tariffs and uncertainty

Published: 08 Apr. 2025, 00:00

A screen in Hana Bank's trading room in central Seoul shows the Kospi closing at 2,328.20 points on April 7, down 137.22 points, or 5.25 percent, from the previous trading session. [YONHAP]

The global economy has once again found itself on edge — this time, over a trade war barreling forward with renewed intensity. Markets across Asia plunged Monday in a sell-off that echoed the chaos seen on Wall Street just days earlier. With fears of a recession gaining traction, Korea faces mounting pressure to navigate a crisis not of its own making, but one with consequences it cannot avoid.

The Kospi sank 5.57 percent, triggering a rare sidecar mechanism, while the Kosdaq fell by a similar margin. In Japan, the Nikkei225 dropped nearly 8 percent, and Taiwan’s Taiex lost close to 10 percent. The won posted its steepest one-day decline in five years, shedding 33.7 won against the dollar.

These dramatic swings came on the heels of a sharp downturn in U.S. markets, where the S&P 500 and Nasdaq lost over 10 percent across two days. The spark was U.S. President Donald Trump’s sweeping tariffs on 57 countries — a move that accelerated trade tensions into open confrontation. China fired back with a 34 percent tariff on American goods and began restricting rare earth exports. The European Union, too, is weighing retaliatory measures. A coordinated unraveling of the global trading system now seems less a warning than a reality.

Amid the escalating tariff war, warnings of an impending recession are growing louder. JPMorgan recently downgraded its U.S. growth forecast for the year to -0.3 percent. Jeremy Siegel of the Wharton School suggested the probability of a U.S. recession now exceeds 50 percent if current policies persist. "Markets should brace for stormy conditions," he said.

U.S. President Donald Trump talks to members of the press aboard Air Force One during a flight to Joint Base Andrews, Maryland on April 6. [REUTERS/YONHAP]

For Korea, a nation whose economy is deeply entwined with global trade, the stakes are particularly high. Washington’s 25 percent tariffs, set to take effect April 9, threaten Korea’s top exports to the United States — automobiles and semiconductors. With China, its other key trading partner, locked in the same conflict, Korea may find itself caught in a tightening vise.

Yet just as the economic outlook dims, the political landscape offers little reassurance. With the country heading into an early presidential election, governance is in a state of limbo. Urgent policy responses — such as passing a supplementary budget to support wildfire recovery and stimulate domestic demand — must not be delayed. Trade diplomacy, too, must move swiftly under acting president Han Duck-Soo, a veteran of international negotiations.

The road ahead will demand both resilience and clarity. As external shocks test Korea’s economic foundation, political leaders must set aside partisanship and act decisively to protect it.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.