Stocks and Tariffs: Who's to Blame?

Within just the past few months, President Donald Trump has imposed tariffs affecting the American people for purchases on imported goods. His goal when he first came into office was to reshape and redefine America’s trade relationship with other countries , mainly through tariffs— taxes used for goods coming in from other countries. Trump believes that the purpose of these tariffs are to encourage citizens to make more American made purchases, thus leading to more investment and improving the stock market. As a result of the institution of these taxes, many lower-class consumers have been struggling to easily purchase items  that are necessary to their daily lives. From NBC News, “The total impact from the tariffs announced since Trump took office could cost the average household $3,800 per year, according to analysis by the Budget Lab at Yale University.” A setback of a few thousand dollars could impact families on their ability to have sufficient needs and luxuries. The first tariffs of his current term were placed on China. While the ways of global trade are in much need of help, Trump wants to fix the conflicts intertwined. He believed the tariffs would be beneficial in creating a spike in job occupancy opportunities and a higher amount of goods purchased solely within the U.S. In response to Trump’s imposition, China has put tariffs on American goods. He has also imposed tariffs on many other nations importing goods. As of May 25th, Trump has postponed the threat of a 50% tariff on goods in European nations until July 9th, in which the extension occurred because of a call with European commissioner Ursula von der Leyen. What started from tariffs significantly increasing from President Trump has now sprouted into a trade war because of the back-and-forth. 

When a trade war is in action, the stock market is affected negatively and becomes very unstable. When companies are needing to spend more of their finances on materials, it causes a decrease in their profits. The stock market may go down as a whole when profits from companies deflate because the stock prices correspond and react to profits decreasing; furthermore, the policies have increased global tensions and disrupted supply chains within companies. The trade war is having an incredible impact on stocks and purchases, but there are other factors as well. Global impacts, inflation, previous tension from the last Trump term, and interest rates are also causing the instability. The Trump administration’s placement of tariffs has played an incredible role in the uncertainty in international trade along with the consequences held on people worldwide. Our world and economy is constantly evolving and learning from choices made by leaders, causing economic shocks like this. Although President Trump is constantly changing his policies, the tariff war is still ongoing,  his consistency for affecting the American people’s financial situations and purchases is apparent and is predictive as to what the next four years may look like in his term.