Continued DAX Crash: Effects of US Tariff Policy
The DAX, Germany’s leading stock index, is experiencing a dramatic wave of sell-offs triggered by the aggressive US tariff policy. This development has completely wiped out the significant gains seen since the beginning of the year.
Background
The US government under President Donald Trump implemented comprehensive tariffs on almost all imports from almost all countries on April 2, 2025. These measures are part of a strategy to strengthen the US economy through protectionism and to reduce the trade deficit. The tariffs include a base tariff of 10% on most imports, with higher rates for certain countries such as China (54%), the European Union (20%), Vietnam (46%), Thailand (36%), Japan (24%), Cambodia (49%), and Taiwan (32%).
Effects on the DAX
- Price Losses: The DAX has suffered massive price 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. The index managed a slight recovery but still lost about 5.85%.
- Loss of Year-to-Date Gains: The gains of the DAX since the beginning of the year, which amounted to about 18%, have been fully wiped out by the recent losses.
- Technical Analysis: The DAX has fallen below the 200-day line, which is viewed as negative from a technical perspective. Experts expect the markets to remain under pressure as long as no negotiations take place between the affected countries.
Global Effects
- Recession Fears: The US tariff policy has fueled recession fears worldwide. The VIX volatility index, a measure of market volatility, has doubled and is nearing pandemic levels.
- Retaliatory Tariffs: China has already reacted with extensive retaliatory tariffs on US imports, set to take effect on April 10. The EU is also possibly planning countermeasures.
- Economic Uncertainty: Uncertainty in the markets is high as the long-term economic effects of the new tariffs are difficult to predict. Furthermore, central banks’ hands are tied due to the potential for inflation.
Expert Opinions
- Andreas Lipkow: “Nerves are frayed right now.” Concerns about the economy have risen significantly, and the markets are reacting very nervously to US tariff policy.
- Jürgen Molnar: Market sentiment is extremely negative. Large fund managers are reorganizing their portfolios in light of a potential global recession.
- Maximilian Wienke: Despite the negative sentiment, new economic data or the US earnings season could serve as a stimulus.
Overall, the US tariff policy has led to a massive destabilization of global markets, with the DAX being one of the most affected indices. The future outlook remains uncertain as the reactions of other countries and possible negotiations will be crucial for further developments.