Last Friday, the U.S. stock market experienced its biggest loss in two years. The Dow Jones Industrial Average closed down an extraordinary 2,231.07 points, or 12.93 percent. This drop is the biggest single-day drop since June of 2020, at the height of the Covid-19 pandemic. Fallout from President Donald Trump’s recently imposed tariffs. Worries are mounting about the toll they’re taking on markets and the overall economy.
Over the course of two days, the S&P 500 dropped 10%. The past month’s decrease has brought the index down almost 17.5% from its peak last December. At the same time, the Nasdaq Composite fell into bear market territory, a worrisome sign for investors as it indicates a broader trend. Market analysts talked about the sell-off in apocalyptic terms, describing it as one of the worst in history, sending panic signals across multiple markets.
President Trump tweeted the steel and aluminum tariffs on Saturday. He did this by placing a blanket 10% rate on all the other U.S. trading partners. Individualized rates also apply to 60 other countries, making the dynamic of international trade a bit more complicated. These measures were always going to be a difficult ask for markets, but the conventional wisdom was that they would be surmountable.
“We have been the dumb and helpless ‘whipping post,’ but not any longer.” – Donald Trump
As a result, Jaguar Land Rover Automotive announced their move to address the tariffs. They froze all US-bound shipments in response to a new, punitive 25% import tax on vehicles. It recently revealed that this pause on shipments would kick off this month, further hampering its ability to operate in its most crucial market in the U.S.
These tensions over the tariffs have brought a widespread international spotlight. Israeli Prime Minister Benjamin Netanyahu will be at the White House on Monday. He says he will address the impact of these new trade measures with President Trump.
Chinese officials have responded rather aggressively to the proposed tariffs. Chinese Foreign Ministry spokesperson Guo Jiakun said at the time that “the market has spoken.” This shows that the negative economic effects of the tariffs are starting to hit home. He went on to specifically condemn the trade and tariff war started by the United States as “unprovoked and unjustified.”
As American consumers grapple with the uncertainty brought on by these tariffs, various companies are stepping up to reassure their customers. Ford released a statement reaffirming the company’s commitment to supporting Americans through these tough times.
“We understand that these are uncertain times for many Americans. Whether it’s navigating the complexities of a changing economy or simply needing a reliable vehicle for your family, we want to help.” – Ford
Electric vehicle and clean tech industry leaders are warning that the timing of these tariffs is particularly misguided, given other severe existing economic pressures. Mike Hawes, chief executive of the U.K.’s Society of Motor Manufacturers and Traders (SMMT), stated that “the industry is already facing multiple headwinds and this announcement comes at the worst possible time.” He reiterated how SMMT remains in regular dialogue with government officials. They have been loudly calling for the conclusion of ambitious, comprehensive and job-creating trade negotiations—TTIP and TPA—that would move both economies forward.
The pharmaceutical sector certainly isn’t immune to these changes either. Eli Lilly’s CEO David Ricks articulated that businesses should eat the cost of tariffs. This reality puts them in the position of having to make painful decisions between staff and research expenditures.
“We can’t breach those agreements, so we have to eat the cost of the tariffs and make trade-offs within our own companies.” – David Ricks
Rick warned that slashing research and development would be one of their first moves. This response is to some extent a reaction to this increasing fiscal and budgetary stress.
“Typically, that will be in reduction of staff or research and development, and I predict R&D will come first. That’s a disappointing outcome.” – David Ricks
Jaguar Land Rover understands how important the U.S. market is for its two luxury brands. They argue that with the right changes in trade policy, the impacts of reaping those benefits could be massive.
“The USA is an important market for JLR’s luxury brands.” – Jaguar Land Rover Automotive