U.S. stock index futures dropped Tuesday evening after Wall Street ended sharply lower with the S&P 500 closing below 5,000, as tariffs announced by President Donald Trump were set to take effect at midnight.

President Trump signed an executive order on Tuesday to increase reciprocal tariffs on China to 84%, from 34% earlier announced on April 2. This brings total duties on China to 104%, with 20% tariffs already in place.

S&P 500 Futures dropped 1.8% to 4,929.75 points, while Nasdaq 100 Futures declined 2.2% to 16,868.50 points by 20:25 ET (00:25 GMT). Dow Jones Futures lost 1.4% to 37,325.0 points.

S&P 500 falls below 5,000 as Trump escalates trade war with China

In regular trading, Wall Street experienced significant volatility, culminating in notable declines across major indices. 

The S&P 500 closed at 4,982.77, down 1.6%, marking its first close below the 5,000 threshold in nearly a year. 

The Dow Jones Industrial Average also fell by 0.8%, while the NASDAQ Composite slipped 2.2%. This downturn was largely attributed to escalating trade tensions as the Trump administration prepared to implement substantial tariffs on Chinese imports.

The administration confirmed plans to impose a cumulative 104% tariff on Chinese goods, set to take effect at midnight. The tariffs include an additional 50% levy on Chinese goods, supplementing an existing 34% reciprocal tariff. 

Before this, China had vowed to "fight to the end" if Trump moved ahead with his new tariff threats, further heightening investor anxiety and market instability.

Investor sentiment was initially buoyed by comments from Treasury Secretary Scott Bessent, suggesting openness to negotiations.

However, optimism faded after U.S. Trade Representative Jamieson Greer confirmed that no exemptions would be granted for products or companies affected by the new tariffs. This firm stance diminished hopes for a diplomatic resolution and contributed to the market’s reversal.

Tech slides: Tesla, Apple slump 5%

The technology sector was particularly impacted, with Apple Inc (NASDAQ:AAPL) shares dropping 4.8% to over an 11-month low.

Tesla Inc (NASDAQ:TSLA) shares slumped 5%, while market darling NVIDIA (NASDAQ:NVDA) closed 1.4% lower.

Amazon (NASDAQ:AMZN) and Meta Platforms Inc (NASDAQ:META) also suffered losses.

Broadcom Inc (NASDAQ:AVGO) closed 1.4% higher, reversing tariff losses, after it announced a new share buyback program of up to $10 billion, set to run through the end of the year.

Looking ahead, investors await consumer price index report due on Thursday for guidance on the country’s inflation outlook.