In light of many recent events, the stock market has fallen, and many people have seen a decrease in the value of their investments. But why is this happening now? Part of President Trump’s campaign for office was the fact that he was going to place tariffs on other countries to raise revenue for the United States. A tariff is a tax placed on countries that are exporting goods into America, and it is a common tactic so people will purchase more domestic goods. However, the consumers end up being the ones to pay for the tariffs as factories increase the price that the companies must pay, and then the companies increase their price for the consumer to pay, which ultimately leads to an increased price for the consumer. President Trump made it seem as though these tariffs would be the ticket to people getting richer, which is a huge factor as to why he was elected as president. However, since the tariffs were placed on China, where most of our goods come from, anyone who has invested money in the global stock market has seen a significant decrease in value.
Additionally, trading volume has hit a high that hasn’t been seen in eighteen years, where markets have traded 29 billion shares. According to CNBC, some very big indices that have taken significant declines include the Dow Jones Industrial Average, the S&P 500, and the Nasdaq Composite. These indices are so notable that many other news outlets have also been reporting on them. CBS News states that “The S&P 500 fell 189 points, or 3.5%, Thursday to close at 5,268. The Dow Jones Industrial Average dropped 1,015 points, or 2.5%, and the Nasdaq Composite sank 4.3%.” To put into perspective the gravity of this drop, the stock market tends to move between +1 and -1 a day on average. So, when the stock market is usually down a little, it isn’t as terrible, but now it is down more than people would have expected.
These tariffs that were placed caused a trade war between the United States and China, as that is where we put the largest tariffs, with an increase of 145%. However, the President has reassured America by saying that we as a country have been gaining so much revenue. Additionally, he says that it will get worse before it gets better, as soon the countries that are receiving the tariffs will be the ones paying for them. However, looking at this from a logical standpoint, it doesn’t seem to make total sense, as the demand from the consumers will outweigh the demand from the factories. This is because the factories have the opportunity to also ship their product to other countries that don’t have these high tariffs, while many consumers will most likely be unhappy with only purchasing domestic goods as they are more expensive. CBS proves this by stating how “China said it is raising its tariffs on U.S. products to 84%, up from its previously announced 34%, after President Trump’s import duties on Chinese goods went into effect today at a rate of 104%.” This was also prior to President Trump’s retaliation to their opposition, where he increased the tariffs another 41%.
The stock market is unpredictable; no one truly knows what will happen with it, as it follows no pattern. Despite this, if the tariffs continue to grow and put a strain on these companies, it is probable to assume that it will continue to drop. As of April 7th, 2025, the stock market officially entered a bear market, which is described by the New York Times as “when stocks fall 20 percent from a recent peak.” This same article states that as we are in a bear market, people need to be aware of their stocks and what is happening with their money, as it will most likely continue to fluctuate. While it is still good to closely monitor your stocks, as of April 17, 2025, the stock market has moved out of a bear market. However, the market is very volatile and only moved out of bear territory with the help of its constant shifting. It would go up a certain amount, and then down, and then up again, which resulted in more upside in the market. It will be a test of time as to whether the stock market will see the other end of this down period soon or if it will be perpetuated as President Trump continues to execute his plan.
