US Tariffs Sink the Markets

After President Donald Trump’s sweeping minimum 10% tariffs (an additional levy on imported goods) were introduced, global markets — and the US markets, especially — sank to their lowest levels in years.

Why It Hurts: The White House hopes that tariffs lead to a “Made In America” revolution, bringing back manufacturing from overseas and ultimately employing more American workers. That goal will take some time (that is, if that’s the ultimate result)… but in the meantime, a 2008-like recession may loom as a consequence.

Behind the Chaos: Happy Liberation (From Your Market Cap) Day.

• The S&P 500, the Dow, and the Nasdaq were all down almost 4%, while the gauge measuring the worth of the dollar was also down. Two-thirds of the companies on the S&P 500 saw their stocks slip at least 2%.
• However, companies that manufacture most of their products outside of the US — especially in China, Vietnam, Bangladesh, and India — were hit the hardest. That group includes Apple (10%), Nike (12%), Shopify (10%), and Target (10%).
• To put it in perspective, Apple lost $275 billion in value, while the overall S&P 500 lost about $2 trillion in overall worth.
• In contrast, Asian stocks fell less than 1%, and Europe’s stocks fell less than 3% (while the Euro rose in value), per Bloomberg.

Closing Bell: The tariffs will affect everything from cars to clothes to toys, meaning companies will either need to absorb the costs themselves or pass them on to consumers. According to JPMorgan economist Michael Feroli, the tariffs are equivalent to the largest tax increase since 1968, which could raise the cost of goods, hurt consumers’ spending power, and, as many saw today, put a dent in people’s 401Ks or pensions.

Mark Cuban, who knows a thing or two about money, said, “It’s not a bad idea to go to the local Walmart or big box retailer and buy lots of consumables now.” Yikes.