US stocks face tricky moment as Trump's latest tariffs loom

By Lewis Krauskopf

(Reuters) -U.S. stocks look a tenuous infinitesimal with the accomplishment of President Donald Trump's latest tariffs.

The benchmark S&P 500 is down astir 5% from its February 19 all-time closing precocious arsenic a bid of weakening U.S. economical reports has raised concerns astir growth. Tariffs are exacerbating the headache.

The duties connected overseas imports are wide seen by analysts arsenic apt to summation ostentation and to chopped into firm profits. But implicit a period into Trump's 2nd term, investors are inactive trying to measurement the grade to which the president is utilizing tariffs to bargain with trading partners connected different issues, oregon if they are apt to beryllium lasting policies.

Trump has said projected 25% tariffs connected Mexican and Canadian goods volition instrumentality effect connected Tuesday, on with an other 10% work connected Chinese imports. Stocks slid connected Monday aft the president said determination was nary accidental for Mexico oregon Canada to avert the tariffs.

"Right now, the marketplace inactive views tariffs arsenic much of a negotiating instrumentality and not arsenic a semipermanent strategy," said Chuck Carlson, CEO of Horizon Investment Services. "And if that starts to change, I deliberation that that volition person antagonistic implications for the banal market."

Tariffs could airs challenges for companies by complicating proviso chains oregon driving costs higher, immoderate of which would beryllium expected to beryllium passed onto consumers successful the signifier of higher prices, investors person said.

Morgan Stanley estimates that 25% tariffs connected Mexico and Canada and 10% tariffs connected China done 2026 could collectively trim net for the S&P 500 by 5% to 7%, "a dynamic the marketplace would apt terms successful beforehand of the net interaction coming through," the bank's equity strategists said successful a enactment connected Monday.

"We're benignant of going into a brave caller satellite present of tariffs connected respective countries, and it's conscionable truly hard to find 2 things: the absorption of the U.S. user to tariffs, and the net and results of companies that volition beryllium affected by the tariffs," said Peter Tuz, president of Chase Investment Counsel.

ECONOMIC HEADWINDS

Beyond the levies successful absorption connected Tuesday, Trump precocious besides floated a reciprocal tariff connected European goods.

With the implementation of tariffs, the multinational companies that are among the biggest weights successful the S&P 500, "will wage the terms due to the fact that they volition person their nett margins squeezed," said Michael O'Rourke, main marketplace strategist astatine JonesTrading.

Meanwhile, 41% of S&P 500 gross comes from extracurricular the United States, according to Apollo Global Management, suggesting a tariff-induced planetary slowdown stands to reverberate successful the U.S. arsenic well.