Trump's tariffs taking toll
As of today, the S & P has dropped more than 10 percent since February highs, the textbook definition of a market correction.
In a sharp correction to stock market gains in 2024, the NASDAQ, Dow Jones Industrial Average, and the S&P 500 indexes posted significant declines this week, a move analysts have largely attributed to the volatile trade policies emerging from Washington. Economists and market analysts cite President Donald Trump's unpredictable tariff announcements as a primary driver of investor anxiety.
Over the last week, the Dow Jones dropped 4.6 percent over the past week, while the NASDAQ fell by 4.9 percent. The broader S&P 500 saw a 4.3 percent decline, with industrial and technology sectors taking the brunt of the sell-off.
"I mean, tariffs on which countries, which products, you know, over what period of time? They're on again. They're off again," Moody's Chief Economist Mark Zandi said. "Think about that from the perspective of a businessperson trying to decide to make an investment or a hiring decision, particularly these investment decisions that take many years - you know, they play out over many years."
As of today, the S & P 500 has dropped more than 10 percent since February record highs, the textbook definition of a market correction.
The uncertainty stems from Trump's recent tariff proclamations targeting key U.S. trade partners, including Canada, Mexico, China, and the European Union. The tariffs - and retaliatory measures from affected nations - have heightened fears of an escalating trade war.
"His flip-flopping on tariffs and his old-fashioned ‘America First’ stance is weighing on consumption and knocking confidence," Kathleen Brooks of trading platform XTB said.
Economists warn that the tariffs could have broader consequences beyond the stock market. Trade disputes may slow global commerce, affecting U.S. exports and lowering corporate earnings. As consumer goods prices rise, retail sales could weaken, reducing state and local sales tax revenue.
For municipalities like Elk Grove, the tariffs could lower retail and new auto sale resulting in lower sales tax revenues, which is the city's largest single source of revenue. The city recently reported lower than budgeted sales tax revenues during a recent midyear budget review.
As its major trading partners remain unresolved, market analysts warn that further corrections could follow, driven by both economic fundamentals and investor sentiment.
