Economists warn of another 'Black Monday crash' after Trump tariffs hammer market

President Trump's tariffs could spark a "Black Monday crash" if the massive market sell-off from Thursday and Friday spills into next week, a leading US pundit has warned. MSNBC's Jim Cramer has warned "the 1987 scenario" - where global losses were estimated at £1.35tn - is the most likely outcome if the White House doesn't alter its position and the European Union hits back.

"If the President doesn't reach out and try to reward these countries and companies that play by the rules then the 1987 scenario - the one where we went down three days and then 22% on Monday - has the most cogency. We will not have to wait out too long will we? We'll know by Monday", Mad Money host Mr Cramer said at the end of last week.

Posting on X, Mr Cramer said: "If President Trump does nothing and if Europe retaliates then we the odds jump for an October 87 replay".

On October 19 1987, known as "Black Monday", the Dow Jones Industrial Average (DJIA) fell 22.6% - the largest one-day percentage drop in its history. In the UK, the FTSE fell 23% over two days.

In the days leading up to October 19, the DJIA had fallen gradually since October 14. Mr Cramer and others fear the pattern that led to 1987 crash is being repeated.

Larry Summers, the US Secretary of the Treasury under President Clinton, shared Mr Cramer's prediction that the markets may tumble again on Monday. He too made a reference to the 1987 crash. Writing on X, he said: "I think there is a very good chance there's going to be more turbulence in markets the way we saw on Thursday and Friday. This was the fourth largest two day move since the second World War.

"The other three were the 1987 crash, the 2008 financial crisis, and the COVID pandemic. A drop of this magnitude signals that there's likely to be trouble ahead, and people ought to be very cautious."

All three US indexes were down 5% on Friday, the second consecutive day of steep falls. Meanwhile, the UK FTSE saw its biggest drop since the Covid pandemic.

Meanwhile, the tech-heavy Nasdaq closed in bear market territory, meaning it fell 20% below its recent peak.

In response, US Federal Reserve chair Jerome Powell issued a rare warning that the Trump's tariffs could spark both higher unemployment and higher inflation. "We face a highly uncertain outlook," he said.

But as of Sunday evening, President Trump had given no sign he was considering backtracking. He continued to play golf, sharing a clip of his drive and reposting a clip which claims he is "purposely crashing the market".