Causes of the DAX Crash
The DAX, the leading index of the German stock exchange, is experiencing a dramatic wave of sell-offs triggered by aggressive US tariff policy. This development has completely wiped out the significant gains made since the beginning of the year. Here are the key aspects of the current situation:
US Tariff Policy
The recent measures by US President Donald Trump, who imposed comprehensive tariffs on nearly all imports from almost all countries on April 2, 2025, have led to a massive deterioration in global trade relations. These tariffs include a 10% “baseline” tariff on most imports, as well as more specific tariffs for countries such as China (54%), the European Union (20%), Vietnam (46%), Thailand (36%), Japan (24%), Cambodia (49%), and Taiwan (32%).
Reactions from Other Countries
China has already responded with counter-tariffs on US imports, which are set to take effect on April 10. The EU may also be planning tariffs on American products that could come into effect in mid-April.
Impacts on the DAX
The DAX has suffered massive losses in recent days. On Monday, April 7, 2025, the index fell by about 9.16% to 18,751.75 points, with a low of around 10% at 18,489.91 points. These losses have wiped out all annual gains of the DAX. Additionally, the DAX has fallen below the 200-day line, which is viewed negatively from a technical perspective. This could indicate further downward movement.
Expert Opinions
Andreas Lipkow, a financial market expert, emphasizes that investor nerves are frayed and concerns about the economy have been massively inflamed by the US trade war. Jürgen Molnar, capital market strategist at RoboMarkets, sees negative sentiment in the markets and expects that large asset managers will adjust their portfolios to prepare for a possible global recession. Maximilian Wienke, market analyst at eToro, mentions that the new US tariffs overshadow everything and worries about a recession are rising, but new incentives such as US inflation data and the earnings season are also on the radar.
Global Impacts
The global markets are reacting with fear of a possible recession, as trade tensions and tariffs could impair economic activity. China’s and the EU’s responses to US tariffs could lead to a further escalation of the trade war, putting even more pressure on the global economy.
Overall, it is evident that the aggressive US tariff policy is heavily burdening the global markets and has led to a massive sell-off wave in the German stock market. The outlook remains uncertain as trade tensions persist and the global economy faces challenges.