The stock market plunges after Trump's tariff bluster as businesses say they were hit 'right in the gut'
After opening with a dramatic drop on Monday, the stock market recovered throughout the day as it continued to react to President Donald Trump's capacious trade negotiations with China. But on Tuesday, in response to the continued tumult and a new round of higher impending tariffs set to go in effect on Friday, the Dow Jones plunged more than 600 points over the course of the day, and closed with a massive loss of more than 450 points.
American businesses that depend on imports from China were most directly impacted. Phil Page, the CEO of the hat company Cap America, told CNN that he was blindsided by the collapse of the trade talks.
He had already accounted for a 10 percent tariff imposed by Trump, but that could now go up to 25 percent if he follows through on this threat.
"If it goes to 25 percent on Friday — there was no time to react this thing," he said. "We've got over $4 million worth of goods either on order or in transit here. And that's going to equate to a $600,000 hit and expense to us that we did not anticipate. So it really just hit us right in the gut."
"We've got over $4 million worth of goods ... that's going to equate to a $600,000 hit and expense to us that we di… https://t.co/BWGXASeDDS— CNN (@CNN)1557256283.0
Treasury Secretary Steve Mnuchin has said that businesses had notice that this could happen, so they should be prepared, but, Page said that Trump himself had sent contradictory messages about how the talks are progressing, making it difficult to plan for the future.
Other businesses owners who import from China agreed, telling CNN the proposed hikes have left them "freaked."
"This confirms our worst fears," said Rick Helfenbein, president and CEO of the American Apparel & Footwear Association. "There are those of us who are optimists and thought it would go away and those who say it could come back at any time — and this points to the latter."
And despite the president's claims to the contrary, the brunt of the tariffs is being felt by American consumers rather than China, economists said.
The president seems to think that acting tough will strengthen his negotiating position, even if it hurts some American businesses and workers. But NBC News reported that experts think China has already accounted for his bluster, so the new threats won't change their calculations much. And Trump has a weakness the Chinese government doesn't have: the 2020 election. Trump can't be harming American businesses and straining the U.S. economy in the run up to Election Day without seriously imperiling his already unimpressive chances for reelection. So China may just be able to wait Trump out.