Megacap U.S. tech companies including Apple and retail giants Walmart and Nike led a global market meltdown as President Donald Trump’s sweeping new tariffs heightened fears of a spike in costs across a wide swath of industries.
The tariffs, which threaten to destabilise the world trade order and unsettle businesses, mark a sharp reversal from just a few months ago when hopes of business-friendly policies under the Trump administration pushed U.S. stocks to record highs.
Trump said he would impose a 10% baseline tariff on all imports to the United States and higher duties on dozens of other countries, pushing U.S. tariffs to the highest in more than a century, according to Fitch Ratings.
Analysts and economists warned that hefty tariffs on imports from Asian manufacturing hubs and potential retaliatory measures could rattle global supply chains and dent corporate profit margins.
“These actions could potentially shave 1 to 1.5 percentage points from (U.S.) growth this year – meaningfully raising recession risks,” Deutsche Bank Senior US Economist Brett Ryan said.
The Dow Jones Industrial Average fell 2.72% and the benchmark S&P 500 lost 3.21%.
Apple’s shares fell 8%. More than 90% of its manufacturing is based in China, one of the hardest hit countries by the tariffs, according to an estimate from Citi.
Rosenblatt Securities estimated that the iPhone maker could face $39.5 billion of tariff costs, adding that “if these costs were just eaten by Apple, we estimate a near 32% hit to operating profit and EPS, annualized.”
Makers of PCs and AI servers will be hit hard as well. The U.S. imported nearly $486 billion in electronics last year, the second-biggest sector for imports, after machinery, according to Census Bureau data.
PC makers, including Dell and HP, could face cost increases of about 10%-25%, adding between $200 and $500 in costs per unit, said Tony Redondo, Founder at Cosmos Currency Exchange.
That would squeeze margins at the companies, or force them to raise prices, potentially dealing yet another blow to PC demand that has already been choppy in recent years. Shares of Dell and HP were down about 10% and 8%, respectively.
The tariffs would make AI servers pricier too, potentially adding millions in extra costs and upending AI development plans at Big Tech.
Microsoft fell 2.1% and Alphabet tumbled 3.2%.
Semiconductors were not named in the list of goods subject to reciprocal tariffs but they would still presumably be hit by the 10% baseline duties, analysts said.
The iShares Semiconductor ETF slumped 4.7%.
Major U.S. retailers including Walmart, Amazon and Target, which count on several Asian countries including China as key suppliers and could be forced to raise prices, slumped between 3% and 7%.
Among the major global production hubs, China was hit with an aggregate tariff of 54%. Vietnam was slapped with 46%, Cambodia with 49% and Indonesia with a 32% tariff rate.
Sportswear retailers Lululemon slumped 10.1% and Nike fell 10.9% as their key sourcing partners were hit with steep levies.
“With Asian production hubs particularly hit, all footwear and apparel company margins will be affected as costs rise,” Jefferies analysts said in a note.
The S&P 500 retail index fell 5.4% to hit its lowest since September 2024.
Major Wall Street lenders including JPMorgan Chase & Co , Citigroup and Bank of America Corp, which are sensitive to economic risks, dropped between 5.3% and 8%.
Declining equity valuations, alongside a muted recovery in M&A and IPOs, have raised fears that investment banking income could come under pressure. Weaker consumer confidence may also temper spending, hurting loan demand.
Regional banks were also lower, with Citizens Financial and US Bancorp among the losers.
The S&P 500 banks shed 6%, while the KRW Regional bank index shed 5.3%.
Carmakers dipped, with Ford and General Motors down 1.4% and 2.1%, respectively, as auto tariffs were set to kick in on Thursday.
Electric vehicle makers Rivian fell 3.2% and Lucid 4.8%, while Tesla was trading 3.5% lower.
Tariffs are expected to cost an additional $2,500 to $5,000 for the lowest-cost American cars, and up to $20,000 for some imported models and U.S. consumer impact is estimated at $30 billion for the first full year, Anderson Economic Group estimated.
Ford announced discounts for several models starting Thursday, leaning on its healthy inventory to offer customers thousands of dollars off as rivals hike prices to absorb tariff costs.
Pharmaceuticals were temporarily exempted from the tariffs, helping shares of major drugmakers Pfizer and Johnson & Johnson to weather the market storm in early trading.
Still, UBS analyst Trung Huynh said pharma was not yet “out of the woods”. Trump has an “appetite to effect change” in the pharma industry, which could include a separate round of tariffs or a phased in approach for levying duties on treatments, Huynh said.
U.S. drugmakers are lobbying Trump to phase in tariffs on imported pharmaceutical products in hopes of reducing the sting from the charges and to allow time to shift manufacturing, Reuters reported earlier this week.
Shares of glucose monitor maker Dexcom and GE Healthcare fell more than 5%, leading declines for U.S. medical device firms whose supply chains and revenues are at risk from the tariffs imposed on China, the European Union and Mexico.
Published – April 04, 2025 08:40 am IST
