Why Did the US Stock Market Fall So Hard This Week?
Across the board, the US stock indices are all down, with the Dow Jones falling 1.48%, the Nasdaq Composite dropping 2.64%, and the S&P 500 losing 1.76%.
Investors should rightly be worried since this is the biggest decline we have seen in the stock market in a while. The finger of blame can be pointed squarely at President Donald Trump and his new tariffs. These are designed to target Mexico and Canada and are set to take effect soon.
These two countries have been negotiating with the United States for weeks, but Trump says that there is “no room left” when it comes to negotiating. He has concluded that it is time to impose tariffs, despite the two nations trying to accede to his demands to strengthen their borders against illegal immigrants, weapons, and drugs.
These tariffs were delayed for about a month to give the countries time to discuss their options and to kowtow to the US’ demands. Trump must have decided that their concessions were not enough, and now the economy is paying with a major stock market decline.
Where the Market Is Going from Here
In early market trading for Tuesday, the numbers were still looking alarming. The S&P 500 lost all of its gains since Election Day, and that will hurt investors who were hoping to see these stocks go from strength to strength on Trump’s economic promises and plans.
The new tariffs join those placed on China and imposed by China, which could lead to higher prices and lower profits from companies, resulting in low stock values this year. Many companies should consider the very real problem of reduced profits for the coming quarter, which is something that Target’s (TGT) management is already discussing.
Canada has already fired back with tariffs imposed on US imports, which could further hurt the US economy as it works to recover from high inflation. Mexico has issued tariffs from Chinese products in solidarity with the United States, but they may reverse their position and office their tariff efforts on the US after these new tariffs go into effect.
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