The stock market plunges after Trump's tariff bluster as businesses say they were hit 'right in the gut'

The stock market plunges after Trump's tariff bluster as businesses say they were hit 'right in the gut'
Official White House Photo by Shealah Craighead

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."

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.

Enjoy this piece?

… then let us make a small request. AlterNet’s journalists work tirelessly to counter the traditional corporate media narrative. We’re here seven days a week, 365 days a year. And we’re proud to say that we’ve been bringing you the real, unfiltered news for 20 years—longer than any other progressive news site on the Internet.

It’s through the generosity of our supporters that we’re able to share with you all the underreported news you need to know. Independent journalism is increasingly imperiled; ads alone can’t pay our bills. AlterNet counts on readers like you to support our coverage. Did you enjoy content from David Cay Johnston, Common Dreams, Raw Story and Robert Reich? Opinion from Salon and Jim Hightower? Analysis by The Conversation? Then join the hundreds of readers who have supported AlterNet this year.

Every reader contribution, whatever the amount, makes a tremendous difference. Help ensure AlterNet remains independent long into the future. Support progressive journalism with a one-time contribution to AlterNet, or click here to become a subscriber. Thank you. Click here to donate by check.

DonateDonate by credit card


Thanks for your support!

Did you enjoy AlterNet this year? Join us! We're offering AlterNet ad-free for 15% off - just $2 per week. From now until March 15th.