Markets in Freefall

Ryan Heshmati

April 04, 2025

President Trump’s economic decision making, with the imposition of wide sweeping tariffs beginning at 10% on all imported goods, with specific countries like China targeted with much higher numbers, has scared markets. Ironically, the candidate who ran on promises of bringing economic prosperity has unleashed a world of financial hurt on markets. Thursday the Nasdaq closed down 5.97%, with the S&P 500 not far behind down 4.84%. 

With the rise of leveraged products, many investors faced even more pain than the major indices indicate. There is even a leveraged ETN that trades on 4 times the daily movements of the S&P 500 (SPYU)—it fell nearly 19% Thursday. Among individual stocks, major companies like Apple and Meta both took nearly double-digit percentage losses, collectively wiping out hundreds of billions of dollars in shareholder value. In response to the fallout, President Trump posted a recording of an exchange with the media in which he defended the tariffs, writing, “I think it’s going very well—The MARKETS are going to BOOM…” Unfortunately, investors don’t appear to share in Trump’s enthusiasm.

Value stocks have done well in the current environment; stocks like Procter & Gamble, Philip Morris, and AT&T appear to allure investors with seemingly reliable businesses in an unreliable economic climate. Overall, however, the market reaction is extremely negative.

With the United States effectively picking an economic fight with the entire world, the larger implications are not clear yet. How various trading partners respond will almost certainly have a major role affecting market movements in the coming months. While even the existing tariffs could be enough to have serious negative economic impacts, if they are compounded by a back and forth battle with America’s trade partners, the trouble could be significantly exacerbated.

The Trump administration’s intended reshaping of the American economy is, fittingly, taking shape. As Americans keep inflation concerns at the forefront of their financial mindsets, tariffs are unlikely to alleviate those fears. Of course, President Trump always has the opportunity to reverse course should he change his mind, though he has not made any indication that he plans to move away from tariffs. Ultimately, it is too early for investors and markets to truly understand the implications of Trump’s tariff moves. For now, the public is forced to wait and watch as the nation’s economic activity undergoes potentially major changes. If Trump’s policies do not bring the market “BOOM” he promises, voters will likely take out their frustration on Republicans during the 2026 midterms.