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Trump Tariffs Fuel “Black Monday Crash” Fears as Markets Plunge
Growing anxieties over President Trump’s tariffs are escalating concerns of a potential “Black Monday crash”, reminiscent of the infamous 1987 stock market crash. A prominent US financial commentator warns that the significant market sell-off witnessed last week could extend into the coming week, triggering a major economic downturn. If the White House maintains its current trade policy stance and the European Union retaliates, MSNBC’s Jim Cramer suggests a repeat of the 1987 crisis is a plausible scenario.
Cramer Warns of 1987 Market Crash Repeat
Jim Cramer, host of “Mad Money,” cautioned at the end of last week that failure by President Trump to adjust his approach could lead to a “1987 scenario.” He elaborated, “If the President doesn’t attempt to appease nations and corporations that adhere to established regulations, then the 1987 parallel – where markets declined for three consecutive days, culminating in a 22% plunge on Black Monday – becomes highly relevant. We won’t have to wait long to find out; Monday will be decisive.”
Echoes of “Black Monday” 1987
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In a post on X, Cramer reiterated his apprehension: “If President Trump takes no action and if Europe responds with countermeasures, then the likelihood of an October 87 rerun increases significantly.”
October 19, 1987, known as “Black Monday,” witnessed the Dow Jones Industrial Average (DJIA) plummet by 22.6%, marking the largest single-day percentage decline in its history. Concurrently, the UK’s FTSE experienced a 23% drop over a two-day period.
Leading up to Black Monday in 1987, the DJIA had been on a gradual downward trend since October 14. Cramer and other financial experts are worried that this pattern preceding the 1987 crash is being mirrored in current market conditions.
Summers Concurs: Market Turbulence Expected
Larry Summers, former US Secretary of the Treasury under President Clinton, shares Cramer’s forecast, indicating that financial markets could experience further instability on Monday. He too drew comparisons to the 1987 crash, stating on X: “I believe there’s a strong possibility of continued market volatility, similar to what we observed on Thursday and Friday. This two-day movement was the fourth largest since World War II.”
Summers further emphasized the severity of the recent market activity: “The other three instances were the 1987 crash, the 2008 financial crisis, and the COVID pandemic. A contraction of this magnitude suggests potential difficulties ahead, warranting significant caution.”
Broad Market Declines and Federal Reserve Warning
All major US stock indexes registered a 5% decrease on Friday, marking the second day in a row of substantial losses. Similarly, the UK’s FTSE experienced its most significant fall since the onset of the Covid pandemic.
The technology-heavy Nasdaq Composite entered bear market territory, having declined 20% from its recent high.
Powell Cites Economic Uncertainty
In response to the escalating market concerns, US Federal Reserve Chair Jerome Powell issued a rare public warning, stating that President Trump’s tariffs could trigger both increased joblessness and inflation. “We are facing a highly uncertain economic outlook,” Powell remarked, underscoring the potential risks to the global economy.
President Trump Remains Defiant
However, as of Sunday evening, President Trump had not indicated any intention to reconsider his tariff policies. He continued with his schedule, including playing golf and reposting online content that suggested he was “purposely crashing the market.”