S&P 500 Wipes Post-Election Gain as Trump Unleashes Tariffs
The S&P 500 has erased its post-election gain as U.S. President Donald Trump moves forward with tariffs against key trading partners, including Canada, Mexico, and China, who are all hitting back.
On November 5, the day of the U.S. elections, the S&P 500 index sat at 5782.76. At the time of writing on March 4, it was 5764.34, indicating a softening in investor confidence in the economic outlook for American companies.
What to Know
The tariffs between the U.S., China, Canada, and Mexico has helped to extend a recent slump for U.S. stocks that was prompted by signs of weakness in the economy.
The S&P 500 fell 1.4 percent, weighed down by nearly every sector except real estate and utilities, which are typically considered relatively safer investments.
Imports from Canada and Mexico are now to be taxed at 25 percent, with Canadian energy products subject to 10 percent import duties. The 10 percent tariff that Trump placed on Chinese imports in February was doubled to 20 percent.
Retaliations were swift. China responded to new U.S. tariffs by announcing it will impose additional tariffs of up to 15 percent on imports of key U.S. farm products, including chicken, pork, soy and beef, and expanded controls on doing business with key U.S. companies.
Canada plans on slapping tariffs on more than $100 billion of American goods over the course of 21 days. Mexico also plans tariffs on goods imported from the U.S.
President Donald Trump speaks in the Roosevelt Room of the White House in Washington, Monday, March 3, 2025.
Pool via AP
Why it Matters
Markets are sensing a potentially painful economic blowback from the retaliatory tariffs. Trump is known to be a keen watcher of the markets and has drawn on them in the past as a positive endorsement of his policies.
Trump sees tariffs as a tool to force trading partners into better terms or to protect American firms from global competition. He hopes to provide Americans with better jobs as a result of tariffs.
But critics of tariffs argue they will damage supply chains, increase costs, and drive up inflation, ultimately hurting rather than helping the American economy.
What People Are Saying
Jason Windsor, CEO of UK asset manager abrdn, told Reuters: “It’s quite clear that China, and frankly all the other governments, are trying to avoid [a trade war], but they can’t be seen to be weak, nor do they want to escalate. I suspect concessions will be found and we’ll find a way through this.”
Trump’s Commerce Secretary Howard Lutnick to CNBC: “It’s unbelievable the way we get ripped off around the world and Donald Trump’s going to level set it, make it reciprocal, and make it fair…Tariffs do not, do not, do not cause inflation. Printing money creates inflation. You have a balanced budget, there can’t be inflation…The fact is, we need to protect America.”
Jonas Goltermann, deputy chief markets economist at Capital Economics, wrote in a note last week, per Yahoo Finance: “Many of the key trends in financial markets in the run-up to and immediate aftermath of the US election last November have stalled or partly reversed since President Trump took office last month.”
What Happens Next
Trump has pledged further tariffs against American trading partners on April 2.
All eyes will be on the economic data in the coming months to see how these tariffs are impacting the U.S. and others.
This article includes reporting from The Associated Press.