Is America really back or heading into freefall?
Credit: Shutterstock:Rokas Tenys
The introduction of tariffs, as announced by President Donald Trump on April 2, has caused investors to go into a tailspin, resulting in losses of an incredible $4 trillion (€3.6 trillion) in market value.
This is compared with the peak of the S&P 500 just under a month ago when Wall Street appeared to be full of optimism about Trump and his policy agenda. Conversely, the introduction of new policies, such as the tariff measures, have destabilised this position. Businesses, consumers, and investors have all lost confidence, and as a result, stock prices have nosedived across virtually all sectors.
Do tariffs affect the stock market?
However, and somewhat surprisingly, President Trump appeared unphased by this development and one might even say ‘bullish’ in his response at a recent press conference. He said: “The markets are going to boom, the stock is going to boom, the country is going to boom,” and insisted that the responses to his economic policies were “going very well.”
Many high-profile companies would beg to differ as they suffer substantial declines as a direct result of these latest tariffs. Those most hurt so far are within the tech industry, and this includes those giants that are sometimes referred to as the ‘Magnificent Seven’. For example, Apple, Amazon and Meta all saw a 9% drop in shares. Alongside them, Nvidia saw its prices fall 8%, Tesla shares 5% and Alphabet 4%. Even Microsoft did not get away unscathed as it witnessed a 2% decrease.
What is causing the stock market to drop?
Further misery was heaped on the retail sector, which was also hit hard, with shares of Best Buy, Target, and Dollar Tree each plummeting by 11% or more. With a heavy reliance on manufacturing in China and Vietnam, sports brand Nike also saw their stock value sink by over 10%. This is seen as a direct result of the impact of the recent tariff measures on these two countries.
Even financial services did not avoid the effects of a tumultuous Thursday as both American Express and Bank of America each reported a loss of 11% and 10%, respectively. As a result, it has been stated that Wall Street has experienced its worst day since the height of the COVID crash.
There is just one word on everyone’s lips right now: ‘recession’ and whether or not the US is hurtling towards one, or worst still the entire world.
Over to you – Do you believe President Trump’s tariff measures are a step too far?
