Economic Impacts of the Tariffs
- Trade war anxiety plagued the markets once again this week and made stock investors nervous.
- The S&P 500® Index fell after the Trump administration threatened restrictions on Chinese investment in U.S. technology companies, along with tariffs. The Nasdaq Composite Index dropped, dragged down by its heavier weighting to technology stocks, which stand to lose relatively more from the newly announced investment restrictions in this ongoing trade war.
- As stocks declined, investors moved to safe-haven investments such as Treasury bonds, driving long-term bond yields lower and prices (which move inversely to yields) higher.
- While the U.S. has imposed tariffs on goods from various countries, and those countries have responded, a full-blown trade war—typically including substantial tariffs, quota barriers on a broad set of goods and services, or onerous restrictions on companies from other countries—has not yet materialized.