The trade escalation between the US and China has already left global stock markets in the red and plummeted oil prices. In Colombia, the impact is beginning to be felt at Ecopetrol.
The escalating trade war between the United States and China has triggered one of the worst days for financial markets since the pandemic.
This Friday, April 4, stocks plummeted globally, Treasury bonds gained ground as a safe haven, and oil prices sank to four-year lows, as fears of a global recession grew.
It all started with the new tariff package announced by President Donald Trump. On Wednesday, he imposed a 34% tariff on Chinese products, in addition to universal 10% tariffs on all imports.
A day later, China responded in kind, imposing 34% tariffs, restricting key exports of technological materials, and sanctioning U.S. companies linked to defense and Taiwan.
The result of this clash has been a wave of uncertainty.
This Friday, the S&P 500 (Wall Street's main stock index, the New York Stock Exchange) fell 5%, accumulating its worst two-day streak since March 2020, in the midst of the COVID-19 crisis.
Meanwhile, the Nasdaq 100, led by tech giants like Apple and Nvidia, deepened a 20% drop from its all-time high, officially entering bear market territory.
WTI crude oil plummeted nearly 9%, and Brent (the global benchmark) is near $65, its lowest level in four years. The dollar rebounded against other currencies and is now at $4,200, as is often the case when investors seek refuge amid the chaos.
And the VIX volatility index surpassed 40 points, a level associated with high-stress episodes like the 2023 banking collapse.
COLOMBIA FEELS THE BLOW
The trade escalation between the United States and China is already leaving its mark on the Colombian economy.
The price of Brent crude, the country's benchmark, fell to US$65.39 per barrel this Friday. This drop has a direct impact on the Colombian economy, which is highly dependent on oil exports.
On the local market, Ecopetrol shares were down 5% at 11:00 a.m. this Friday, trading at $1,900 (US$0.45).
The state-owned oil company, heavily exposed to the behavior of crude oil, thus reflects the impact that international uncertainty is already having on Colombian assets.
WHY ARE MARKETS FALLING?
Tariffs are taxes that a country imposes on products imported from abroad. In theory, they serve to protect local industry. But when applied en masse or as a political weapon, they generate distrust, raise prices, and can hinder international trade. That's exactly what's happening now.
Companies fear rising costs, lower sales, and a decline in production. Investors, for their part, fear that consumption (one of the driving forces of the U.S. economy) will slow and that central banks will be unable to contain the damage. Therefore, they are selling stocks and seeking safer options, such as government bonds or the dollar.
US EMPLOYMENT: GOOD, BUT INSUFFICIENT
Amid this situation, the United States government released its monthly employment figures this Friday, which in another context would have been good news.
In March, the economy added 228,000 new jobs, a figure higher than expected. However, the unemployment rate rose slightly to 4.2%, due to an increase in the number of people returning to the labor market.
The sectors that generated the most jobs were healthcare, transportation, leisure, and retail. Wage increases were also reported. But the markets virtually ignored this report: trade tensions and fears of a recession weighed much more heavily.
“Good jobs data doesn't outweigh the magnitude of the current risks,” said Emily Bowersock Hill of Bowersock Capital Partners. “It's unclear whether lower interest rates would be enough to reverse the damage these tariffs could cause.”
The US labor market remains strong, but the rest of the economy is under pressure. Major tech companies like Apple, Nvidia, Tesla, and Alibaba have lost stock market value. Oil prices are at four-year lows, and banks like Morgan Stanley and Goldman Sachs have also seen their stock prices fall.
