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U.S. stocks tumbled on Thursday after President Donald Trump announced his latest plan for tariffs, sparking fears of a global trade war.
The Dow Jones Industrial Average plunged more than 1,679.39 or 3.98%, while the S&P 500 and Nasdaq Composite fell 4.84% and 5.97%, respectively.
The hardest hit sectors were consumer discretionary, energy and technology; consumer staples notched modest gains.
SymbolPriceChange%ChangeXLY$190.70-12.61-6.20XLE$88.51-5.62-5.98XLK$197.81-11.72-5.59XLP$82.470.921.13
Trump rolled out the latest tariffs on Wednesday afternoon during an event at the White House Rose Garden, which he said is going to focus on imposing reciprocal tariffs on U.S. trading partners. Some of the levies were steeper than expected, especially against our Asian trading partners.
The president indicated that aside from the reciprocal tariffs, the administration will establish a minimum baseline tariff of 10%.
Trump on Thursday said the roll-out of tariffs to an “operation,” and said it was “going very well.”
“The markets are going to boom. The stock is going to boom, the country is going to boom, and the rest of the world wants to see Is there any way they can make a deal,” Trump said Thursday as he departed the White House.
President Donald Trump’s tariff plans are moving forward by levying taxes on imported goods that economists warn will lead to price increases for consumers that could push inflation higher and complicate the Federal Reserve’s efforts to stabilize the pace of price growth.
With Trump’s plans for a 10% tariff on all imports plus additional reciprocal tariffs on U.S. trading partners, as well as sector-specific tariffs such as the 25% tariff on imported vehicles and auto parts, either in force now or taking effect soon, price hikes related to tariffs could soon be reflected in the inflation data the Fed is monitoring.
Ryan Young, senior economist at the Competitive Enterprise Institute, told FOX Business that he expects it will be “about six weeks” before price increases due to tariffs start impacting inflation data.
“Assuming Trump goes through with the auto and reciprocal tariffs in early April, prices should go up right away for many goods. That will then show up in April’s CPI and PCE releases,” which are due to be released in May, he said.
Trump’s 25% tariffs on imported vehicles and auto parts are due to take effect on April 3, and the auto tariffs are likely to be passed on to consumers quickly. An analysis by JPMorgan found that “given strong pricing power, automakers will be able to pass on most of the tariffs” and that those auto tariffs “should boost vehicle prices by about 5%,” which they added would be on top of previously announced tariffs.
“It appears the tariffs will be effective next week, so we think the increases will be apparent quite soon. We expect that the rise in inflation will squeeze real disposable income growth to below 1% next quarter, presenting a material headwind to consumption growth,” the analysts wrote.
U.S. stocks, while still down sharply early afternoon, are off the lows of the session. The Dow, for example, bounced off losses of more than 1,500 points.
SymbolPriceChange%ChangeT$28.570.421.51GT$10.261.1412.45KO$73.001.682.35KR$70.63 3.364.99PM$161.735.563.56
Still, investors took cover, buying a handful of more defensive names including AT&T, Goodyear, Coca-Cola, Kroger and Philip Morris.
Consumer staples such as food and drink are considered safe havens during times of market volatility.
Coke is also one of Warren Buffett’s longtime, top positions.
SymbolPriceChange%ChangeI:COMP$16,690.63-,910.41-5.17MSFT$373.19-8.95-2.34
Microsoft shares are down Thursday but not as much as the broader market as of mid-morning. The tech-giant was down over 2% compared to the Nasdaq Composite’s 5% drop.
Still, year-to-date, the stock is off over 11%.
Bitcoin, the largest cryptocurrency by market value, slipped on Thursday, falling to the $82,000 level.
Even before President Donald Trump’s tariffs, cryptos lagged, with bitcoin off nearly 7% this year and down over 18% from its all-time high of $106,734.51 on Dec. 17, 2024, according to the Dow Jones Market Data Group.
President Donald Trump declared Wednesday that “foreign trade and economic practices have created a national emergency” and his tariffs will “strengthen the international economic position of the United States and protect American workers.”
During his Rose Garden remarks, Trump held up a poster board showing the combined rate of tariffs and other non-tariff barriers that other countries impose on U.S. exports alongside the reciprocal tariffs the Trump administration plans to levy on imports from those countries. Among those included were:
China: 67% tariffs and other trade barriers on U.S. goods; 34% reciprocal tariffs
European Union: 39% tariffs and other trade barriers on U.S. goods; 20% reciprocal tariffs
Vietnam: 90% tariffs and other trade barriers on U.S. goods; 46% reciprocal tariffs
Japan: 46% tariffs and other trade barriers on U.S. goods; 24% reciprocal tariffs
India: 52% tariffs and other trade barriers on U.S. goods; 26% reciprocal tariffs
South Korea: 50% tariffs and other trade barriers on U.S. goods; 25% reciprocal tariffs
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