Trump Pushes Through Tariffs, Causing US Stock Market to Lose $4 Trillion in value

Investors are alarmed by President Donald Trump's tariffs, and a stock market sell-off has erased $4 trillion from the S&P 500's top last month, when Wall Street was applauding most of Trump's program, due to fears of an economic slowdown. Businesses, consumers, and investors are now more anxious due to a flurry of new Trump initiatives, particularly the back-and-forth tariff moves against China, Canada, and Mexico, who are important trading partners. On March 10, the stock market selloff intensified. With its largest daily decline of the year, the benchmark S&P 500 opened the day down 2.7%. The Nasdaq Composite saw a 4% drop the biggest one-day drop since September 2022. Monday saw the S&P 500 settle 8.6% lower than its record high of February 19, losing more than $4 trillion in market value since then. The index is now approaching a 10% fall, which would be considered a correction.

Tariff War Causing Uncertainty in the US Market

Over the weekend, as investors feared the effects of his trade strategy, Trump refrained from making any predictions on whether the United States would experience a recession. Speaking at the CERAWeek conference in Houston, Lazard CEO Peter Orszag said that the level of uncertainty brought about by the trade conflicts involving Canada, Mexico, and Europe is making boards and C-suites reevaluate the way forward. The portion about Canada, Mexico, and Europe is unclear, but people can comprehend the ongoing problems with China. This might seriously harm the US economy and M&A activity if it isn't resolved over the next month or so.

When Delta Air Lines opened on March 10th, it cut its first-quarter profit projections in half, which caused its shares to drop 14% in post-market trading. Ed Bastian, the CEO, cited the increased economic uncertainties in the United States. In order to prevent a partial shutdown of the federal government, investors are also keeping an eye on whether Congress can enact a financing bill. On March 12, the United States will release its inflation report. Based on data from the Federal Reserve Bank of St. Louis as of July 2024, the percentage of total corporate stocks and mutual fund shares owned by the wealthiest 10% of Americans was 87%, while the same percentage for the bottom 50% of Americans was roughly 1%. Megacap technology and tech-related stocks like Nvidia and Tesla, which have underperformed so far in 2025, propelled the S&P 500 to back-to-back gains of over 20% in 2023 and 2024, pulling major indexes along.

Ongoing Developments at Wall Street

Since Trump's election on November 5, the S&P 500 has lost all of its gains and has fallen by almost 3%. According to a March 10 Goldman Sachs note, hedge funds cut their stock exposure on 7 March for the biggest amount in over two years. Although investors had been hopeful that Trump's anticipated pro-growth program, which included deregulation and tax cuts, would boost stocks, their euphoria has been tempered by uncertainties around tariffs and other measures, such as federal staff layoffs. Despite the current decline, stock market values are still far higher than historical averages. LSEG Datastream, a global source of financial datasets, reports that as of 7 March, the S&P 500 was slightly above 21 times earnings projections for the upcoming year, as opposed to its long-term average forward P/E of 15.8.