And just like that, the President Trump announced 90-day pause on all tariffs, except those imposed on China, and the market suddenly rallied. So what exactly happened?
What are Tariffs?
Tariffs are taxes that a country might opt to place on products it brings in from other countries. These taxes are meant to protect local businesses by making imported goods more expensive. But even though tariffs can help some companies, they can also hurt the economy especially the stock market. In 2025, that is what everyone is seeing happen right now.
Recently, the U.S. has placed new tariffs on goods from countries like China and Mexico. These tariffs were meant to support American manufacturing and protect certain industries like steel and technology. However, many businesses rely on parts and materials from other countries. When it costs more to get those items, companies spend more money and make less profit. This causes their stock prices to go down.
Stock Market Drops
Investors are reacting fast to this news. Some are selling their stocks because they’re afraid businesses won’t make as much money this year. The stock market doesn’t like uncertainty, and right now, there’s a lot of it. People are worried that more tariffs might be coming, or that other countries will fight back with their own tariffs, starting a trade war. This kind of back-and-forth makes it hard for companies to plan for the future.
In early 2025, major stock indexes like the S&P 500 and the Dow Jones have gone down after tariff announcements. Some companies that trade considerably with other countries, like car makers and tech companies, have seen their stocks fall the most. Even companies that don’t deal with trade as much are being affected, because when the economy slows down, it touches everything.
So, while tariffs might seem like a way to help the country, they can also cause problems. In 2025, everyone is seeing that they are one reason why stock prices are dropping. Investors are being extra careful, and many are waiting to see what the government will do next.
