Investors weren’t happy with President Donald Trump’s reciprocal tariffs, sending stocks tumbling, with the Dow Jones Industrial average shedding 1,135.13 points, or 2.7% at the open on Thursday.
The S&P 500 plunged 3.1% and the Nasdaq Composite index fell 4.2% at 9:33 a.m. EDT. For the Magnificent 7, declines were 7.9% for Apple (AAPL-8.96%), 6.6% for Amazon (AMZN-7.19%), 6.5% for Meta (META-7.26%), 3.5% for Tesla (TSLA-5.11%), 5.4% for Nvidia (NVDA-4.94%), 2.9% for Microsoft (MSFT-2.39%), and 3.4% for Google’s parent Alphabet (GOOGL-3.46%).
“One big question was: Did Trump really mean to impose the tariffs” or were they a feint aimed at drawing concessions, said Melissa Brown, head of investment decision research at SimCorp (SIM0.00%). “From what he said, it does seem more likely that he’s actually going to impose them. It’s not just talk.”
That said, the implementation and effects of the tariffs are still not 100% clear, which will still make it difficult for CEOs to plan, Brown told Quartz. The duties also make the Federal Reserve’s job much difficult because the levies could both increase costs and depress output.
“I don’t think a trade war is particularly good for the stock market,” Brown said. “It’s not the death knell for the U.S. economy, but it could be very harmful for pockets of it.”
The baseline 10% tariff on all countries will go into effect Saturday at 12:01 a.m. ET; the reciprocal levies are scheduled for enactment on April 9 at 12:01 a.m. ET.
China will be hit with 34% tariffs, while the European Union will be slapped with 20% duties, according to a graph Trump held up at a news conference. Vietnam, Taiwan, and Japan will be hit with respective duties of 32%, 24%, and 26%.
The heavy tariffs on Asian countries will weigh heavily on shoe and apparel makers which do much of their manufacturing in the region. Shares of Nike’s (NKE-13.67%) plunged 11%, while those of Lululemon (LULU-12.10%) plummeted 10%, and those of Uggs- and Hoka-maker Deckers (DECK-15.30%) tumbled 14%.
Existing import taxes on Canadian and Mexican goods won’t be affected, with exemptions for USMCA-compliant products continuing. General Motors (GM-3.13%), Ford (F-2.76%) and Stellantis (STLA-4.84%) stocks posted relatively small declines.
Trump’s tariffs will close the de minimis exemption that allows small-value packages to be shipped directly, duty-free from China. The shares of PDD (PDD-4.72%), which owns Chinese shopping site Temu — a beneficiary of the current system — fell 5.4%.
David Wagner, portfolio manager and head of equities at Aptus Capital, was less concerned about the tariffs, saying they’ll only affect about 15% of the economy — which continues to benefit from consumer strength and a strong labor market.
“There’s a buffer here where consumers can absorb the tariffs and continue to spend,” Wagner said. He added that the strong dollar will help moderate the duties’ impact, but warned there’s “no playbook” for this situation.
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