Stocks Down: Trump's Tariffs Impact Markets

The US stock market plummeted on Tuesday as Trump’s proposed tariffs took effect at midnight. The tariffs include a 25% tax on imports from Mexico and Canada, a 10% tariff on Canadian energy, and an increase from 10 to 20% tax on goods from China. Trump's statement that there’s “no room left” regarding any dialog with Mexico and Canada exacerbated the situation.

Investors are looking to sell in fear of a large trade war.

The S&P 500 and the Nasdaq dropped as low as 1.5% today. They are holding strong at this moment around 1.3% and 1% respectively. The Dow Jones fell as low as 1.8% and Bitcoin dropped to around $85.5k. For perspective, Bitcoin was at $102k on February 1st, when Trump proposed these tariffs.

What does this all mean? To start, a tariff is a tax on foreign goods. If a company like TCL, based in China and a manufacturer of TVs, wants to sell its TVs, it is now paying an extra tax at the port of entry into the United States. To offset that cost, companies will charge more for their goods to cover the cost of the tariff. What does that mean to consumers? The prices of TVs will go up. This also applies to fruits and vegetables coming from Mexico or the cost of electricity generation from Canada. According to the Bureau of Industry and Security, an agency of the US Department of Commerce, in 2021, Mexico is the United States’ number one trade partner. 

Snippet via https://oec.world/en/profile/bilateral-country/mex/partner/usa

In 2023 alone, the United States imported $19.5 billion in fruits and vegetables. Consumers should expect the price of those fruits to increase at their local grocer. The USDA has a great outline on what we import and the volume on their website.