This past week, several companies were struggling on the stock market as United States President Donald Trump announced the implementation of his proposed tariffs to be enacted Feb. 1. These tariffs will be placed on the United States key trading partners Mexico, Canada and China. The aggressive tariffs will be 25%of any product imported from Mexico and Canada, along with 10% tariffs on imports from China.
Dow Jones Industrial Average took a hit once the news was announced and dropped 337 points with an overall loss of 0.8%. S&P 500 finished the day with a drop of 0.5%, and their energy lagged the most with only two sectors, communication services and consumer discretionary gained. Nasdaq dropped by 0.3%. Though there were losses, these companies remained above their 50 day moving averages.
Nvidia fell below its 200-day projected moving average again after the announcement of their new Chinese competitor DeepSeeks announcement of the cheaper artificial intelligence model. Jensen Huang, Nvidia’s Chief Executive, met with Trump to discuss curbs for Nvidia’s chips and their competitor DeepSeek.
Trump’s tariffs have several potential implications on the international market. Once he raises his tariffs, it would be increasingly expensive for foreign companies to export their goods into the United States market. Additionally, tariffs would create expensive expenditures for U.S. companies that rely heavily on foreign countries to import needed items for their products. This can eat into American based companies’ profits.
Investors’ strategy must change based on the volatility of the market and the security investors feel on several key issues. Shinobu Hindert, a financial planner and author of “Investing Is Your Superpower,” suggests that tariffs create market volatility and the speed of which these policies will be implemented has created uncertainty. However, other policies or other economic variables could ease a market reaction to new tariffs.
This can be exemplified by the fact that several financial analysts have surveyed that Trump’s first-term tariffs didn’t benefit domestic companies over foreign companies. However, with Trump’s first set of harsher tariffs coming into effect over the weekend it has put several countries on the edge, waiting to observe what will happen.
Mexico and Canada’s leaders displayed confusion as to why these tariffs are being implemented and what they can do, though the president’s rationale is stemming from migration and illegal fentanyl. There is also a lack of clarity coming from the president’s officials leaving many world officials at a standstill. Tariffs can be utilized as leverage on the global political stage, as the United States is one of the biggest economic markets to enter. So, it would be understandable for any president to utilize tariffs to help with other policy negotiations. However, investors are still on edge waiting to see how these tariffs will be utilized and how it will impact domestic companies if implemented for the long run.
