Trump tariff moves carry big risks for everyone

Charley Blaine

Wed, Apr 2, 2025, 7:51 PM 5 min read

President Trump made good on his tariff threats on Wednesday, and the risks to consumer pocketbooks and the U.S. economy may prove considerable.

While the president said his tariffs would unleash "a new golden age" for American businesses, futures trading suggested investors absolutely didn't share Trump's optimism.

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Trading late Wednesday in futures based on the Dow Jones Industrial Average and the Nasdaq-100 Index produced immediate substantial declines. Dow futures were off as many as 1,000 points. Nasdaq-100 futures dropped nearly 900 points.

Standard & Poor's 500 futures were off about 200 points.

Futures trading does not guarantee the stock market will produce similar results in regular trading Thursday. Several times in the past few weeks big drops in futures trading gave way to substantial recoveries in in live stock trading.

A dramatic change in U.S. policy

What does seem clear, however, is that the tariff decisions were bigger than many had expected, and a number of companies, including Apple (AAPL) , footwear company Crocs (CROX) , athletic equipment and apparel company Nike (NKE) , and apparel manufacturer (PVH) , are particularly exposed to the tariffs.

In after-hours trading, Apple shares were down more than 7% after closing at $223.89. Nike slid 7.1% from its close of $64.96. Crocs fell 12.6% after hours from its $111.54 close. It's off a third since June.

The Invesco QQQ Trust (QQQ) , which tracks the Nasdaq-100 Index, was up 0.7% to $476.15 fell 4.4% after hours.

Tesla (TSLA) , up big during the regular trading session on reports CEO Elon Musk is about to give up his DOGE job, fell 8% after hours to $260.10.

Apple has tried to move production of many products from China to Vietnam and India. But tariffs are being imposed on products from both countries.

It still manufactures most of its iPhones in China, a decision made in 2007 when the late CEO Steve Jobs erupted over the quality of glass screens available for the new, hotly anticipated phones. The only place to get the job done to Jobs's standards was in China. The executive who arranged to get the production up and running: now-CEO Tim Cook.

Here's how the tariffs work

Details from the plan released Wednesday include:

25% tariffs on all imported autos, effective at 12:01 a.m. Thursday. Some autos and auto parts from Mexico and Canada might not be affected if compliant with the U.S.-Mexico-Canada Trade Agreement. (Many automakers build autos and trucks in whole or in part in Mexico and Canada and are imported duty free.)
Across-the-board tariffs on all imported. 10% as of late Wednesday. Effective April 5.
Discounted reciprocal tariffs, designed to punish countries with high tariffs already. This means 24% tariffs on Japanese goods and 20% tariffs on European Union products. That would be instead of the 10% tariffs. For Chinese goods, the tariffs could be as high as 54%.
25% tariffs on most goods from Canada and Mexico. Canada exports lumber, fertilizer and grains to the United States.
A threat to impose even larger tariffs in the event of trade retaliation.

A car hauler truck gasses up at a duty-free station in Windsor, Canada, before crossing the Ambassador Bridge into the United States at Detroit. President Donald Trump authorized sweeping new tariffs on goods imported into the United States from other countries. Bill Pugliano/Getty Images

Some goods will not be subject to new tariffs for now. These include some steel and aluminum products, automotive parts, copper, and minerals not available in the United States.

More jawboning to come?

The Trump plan is complex. It may only be a negotiating tactic. In a CNBC interview, former Commerce Secretary Carlos Guttierez guessed most of the tariffs will be gone by year-end.

That said, the Trump administration's new tariff regime is the biggest change in global trade relations since World War II. It does not, however, apply to dollar flows in services, which typically benefit U.S. companies like banks, brokerages, insurance companies and the like.

More Economic Analysis:

What the Administration hopes will result

The Trump administration believes the new tariffs will:

Encourage companies to build or expand capacity in United States.
Reduce tariffs globally.
Generate significant revenue.

Many economists are skeptical the revenue generation will be very large. Maybe tariff reduction will occur. But expanding or building new capacity will take time, probably more time than anyone expects.

If the economy shoots higher, all to the good. But a slump could force the Federal Reserve to cut interest rates to support the economy.

President Trump's big gamble with history

But the risk is that administration will dig in on tariffs. Trump is a lover of the tariffs levied in the 18th, 19th and early 20th centuries. Tariffs were also the federal government's primary source of revenue at a time when federal spending was much more limited.

But the McKinley Tariff of 1890 raised tariffs to more than 50%. It caused a violent rise in prices. As a result, Republicans lost their majorities in Congress and President Benjamin Harrison lost his reelection bid to Grover Cleveland in 1892.

In 1930, Congress passed and then-President Herbert Hoover signed the Smoot-Hawley Tariff bill, which boosted tariffs on imports. But it also destabilized the global banking system and is widely believed to have transformed a deep U.S. recession into the Great Depression of the 1930s.

The bill's sponsors — Senator Reed Smoot (R-Utah) and Willis Hawley (R-Ore.) — were both defeated in the 1932 election.

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