‘Black Monday 2.0’? Jim Cramer predicts 1987-style market crash looming, ‘if the President doesn’t try to reach out…’

In a stark warning to investors, American market commentator Jim Cramer has predicted that recent tariff measures by President Donald Trump could culminate in a market crash reminiscent of the infamous 1987 ‘Black Monday’. Cramer urged the US President to ‘reach out’ to countries that have refrained from imposing retaliatory tariffs, emphasising the need to reward these nations to prevent an escalating crisis. 

“If the president doesn’t try to reach out and reward these countries and companies that play by the rules, then the 1987 scenario… the one where we went down three days and then down 22% on Monday, has the most cogency,” Cramer said. The prediction highlights the potential for significant market turmoil if the current trade tensions are not addressed promptly. 

The announcement of a 10% ‘baseline’ tariff on global imports has already sent shockwaves through the US financial markets. Major indices experienced drastic declines, with the S&P 500 plummeting 6% – its worst performance since the pandemic’s outbreak in 2020. The Dow Jones suffered a loss of 1,679 points on Thursday, followed by a further drop of 2,231 points on Friday, marking a significant two-day slide. This downturn was not contained within the US; markets across Europe and Asia also felt the impact. 

Cramer cautioned that the situation could deteriorate further if not addressed, potentially leading to a crash by Monday. He remarked, “We will not have to wait too long to know. We will know it by Monday.” This comment indicates the urgency of diplomatic engagement to mitigate the fallout from the tariff policies. 

Despite the ominous forecast, Cramer noted that robust US job data might act as a buffer against a full-fledged recession. He stated, “It makes it less likely a crash will necessarily lead to a recession,” suggesting that the strong labour market could provide some resilience amidst the financial upheaval. 

Cramer, known for his bold predictions, has had a mixed track record. His previous forecasts during critical economic periods, such as the 2007-08 financial crisis, have been met with scepticism due to inaccuracies. This history adds a layer of caution to his current warning, with observers taking his predictions with a degree of scepticism. 

“I will contain my anger, but only because I lived through ‘87 and in the end, I came out okay. I was in cash for the crash. I know what this feels like,” Cramer reflected, drawing on personal experience to underline the severity of the situation. His comments underscore the potential for significant market movements reminiscent of past financial crises. 

While the immediate future remains uncertain, the implications of the tariffs continue to ripple through global markets.