Earlier this year, United States President Donald Trump announced tariffs on imports from more than 90 countries, sending shockwaves through global markets and the international trade system, leading to increased uncertainty among investors and businesses.
On April 2, 2025, President Trump imposed a 10 percent tax on all imports, with some country-specific tariffs set to rise shortly after.
Dubbed as “Liberation Day,” this triggered the worst two-day loss in U.S. stock market history, wiping out $6.6 trillion in value. The Standard and Poor’s (S&P 500) declined 18.9 percent from its February high as investors fled to safer investments, such as bonds and gold. A week later, Trump announced a 90-day pause on many tariffs, resulting in markets starting to rebound sharply, with the S&P 500 rising nearly 10 percent and turning positive for the year.
By June 27, both the S&P 500 and the National Association of Securities Dealers Automated Quotations (NASDAQ) hit all-time highs, which was partly due to speculation that the Federal Reserve might cut interest rates to counter the economic slowdown.
Many industries, including automakers, took major hits. General Motors and Ford lost $3.5 billion and $2 billion respectively while Volkswagen reported a £1.3 billion loss in Europe.
Consumer goods also suffered deeply. A 50 percent US tariff on Brazilian coffee caused global arabica prices to rise 30 percent as importers switched to Central America and Colombia.
Yale’s Budget Lab reported that U.S. households faced around $2,100 in higher annual costs from the April 2 tariffs alone and about $3,800 from all tariffs in place by April. Later estimates put household losses closer to $2,400 by Aug, with low-income families hit hardest.
Chinese-owned companies, Shein and Temu, have also been hit hard. In early April, these tariffs were put in place. In July, President Trump signed an executive order, a De Minimis trade loophole that allows low-value goods to be imported into the U.S., which is set to end on Aug. 29. These two problems have forced both Shein and Temu to respond by increasing prices; they have yet to announce how much it will increase by the time this order ends.
Federal Reserve Chair Jerome Powell indicated the central bank was monitoring the economic slowdown and inflation tied to all the tariffs in place. While Powell did not comment on it, investors interpreted his comments as leaving the door open for future investments. Markets reacted positively to this, but analysts cautioned that trade tensions could continue to affect growth.
These tariffs have strained relationships with U.S trade partners. Canada aligned many exemptions with U.S policies under the United States-Mexico-Canada Agreement (USMCA) but kept tariffs on steel and aluminum.
Meanwhile, the European Union secured a deal capping tariffs at 15 percent on pharmaceuticals and semiconductors. These agreements helped alleviate pressure on industries, but proved that ongoing trade tensions still exist.
President Trump’s tariff policies have created a volatile economic environment with long-lasting effects for markets, industries, and consumers. As investors and companies adapt, the long-term impact remains uncertain. Staying informed and flexible is important for navigating this evolving economy.
Trade Barriers, Shaky Markets – Tariffs Today
