The “America First” trade is unraveling in the sweeping turmoil in global markets, with stocks acutely exposed to the US economy sinking alongside the dollar. As Wall Street’s rebellion against Donald Trump’s tariff war intensifies, traders are rushing into fixed-income havens.

About $2 trillion was erased from the S&P 500, with the gauge down about 5%. The Russell 2000 of smaller firms extended its plunge from a 2021 all-time high to 20% on speculation the president’s trade offensive will stunt the American economy. The greenback slid 1.5%, reigniting the debate about its haven reputation during challenging times as the euro, yen and Swiss franc surged. Oil joined a selloff in commodities.

All in, the much-vaunted America-first trade — buying up assets that win when the US outperforms the rest of the world — is reversing on concern that the steepest increase in American tariffs in a century will hammer economic growth.

That’s driving a fierce rally in global bonds, sending the yield on benchmark Treasuries briefly below the closely-watched 4% level. Most other yields also tumbled as money markets priced in a 50% chance of the Federal Reserve delivering four quarter-point rate reductions this year.

Trump has embraced tariffs as a tool to assert US power, revive manufacturing at home and extract geopolitical concessions. Economists say the near-term result of his measures will likely be higher US prices and slower growth, or perhaps even a recession.

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