After the bust comes the boom? That's how President Donald Trump says stocks will react to his tariffs, but the market needs evidence he's willing to negotiate trade deals.

The unexpected scale of the tariffs announcement drove the stock market to its worst day in five years. Tough talk from Commerce Secretary Howard Lutnick and senior trade advisor Peter Navarro that levies were not a start to negotiations contributed to the panic.

Trump, however, suggested he was open to deals, telling reporters "it depends" what other countries are willing to offer -- a ray of sunshine in the gloom.

Governments around the world have largely held off on retaliating so far, perhaps convinced the White House will relent, with the notable exception of China, which said Friday it would impose additional tariffs of 34% on all U.S. goods. Maybe other nations are paying attention to Trump's son Eric's claim that "The first to negotiate will win" in a post on social-media site X. Alternatively, they may just be taking their time before reacting to a complex situation.

Trump's personal and political history strongly suggests he is always open to a deal so long as it happens on his terms. But the choice to impose reciprocal tariffs means a series of bilateral negotiations, complicating hopes for a quick recovery.

How bad can things get? Longtime bear Barry Bannister at Stifel thinks not much worse, calling for the S&P 500 to consolidate around 5,500 this quarter from just below 5,400 at Thursday's close. On the other hand, stock-market corrections normally last 115 days and we're only 40 days in so far, noted analysts at UBS.

Trump has so far shocked the market with his willingness to allow stocks to drop. Negotiation and an eventual rebound is still the most likely outcome but that doesn't mean there won't be a painful wait to get there.

-- Adam Clark

***

Markets Sink Most Since 2020 as Investors React to Levies

The stock market marked its worst day since 2020 after the White House unveiled steep tariffs that will upend the global economy. President Donald Trump tossed some added complexity into the matter by suggesting he was open to negotiations on tariffs, despite two of his closest aides saying the opposite.

   -- Stock investors had nowhere to hide. U.S. stocks lost $3.1 trillion in 
      market value overall, the largest decline for stocks listed on major U.S. 
      exchanges since March 16, 2020, Dow Jones Market Data said. Magnificent 
      Seven stocks shed $1.03 trillion. 
 
   -- Trump told reporters that he might be willing to negotiate with countries 
      over tariffs "as long as they're giving us something that's good." Not 
      long before, senior trade advisor Peter Navarro told CNBC it wasn't a 
      negotiation, and Commerce Secretary Howard Lutnick told CNN Trump 
      wouldn't back down. 
 
   -- Trump predicted that markets were going to "boom" once the effects of 
      tariffs sink in. But global leaders have vowed retaliation. Canada 
      slapped 25% tariffs on vehicles imported from the U.S. French President 
      Emmanuel Macron said European companies should show solidarity and avoid 
      investing in the U.S. 
 
   -- The Yale Budget Lab estimates the overall effective tariff rate on 
      imports to the U.S. will be about 23%, almost 10 percentage points worse 
      than it was expecting. Tariffs that high will cost the average household 
      about $3,800 in higher prices. 

What's Next: The bipartisan Tax Foundation said that altogether, Trump's tariffs will raise nearly $3.2 trillion in revenue over the next decade and cut U.S. economic output by 0.8%. It also said tariffs would reduce after-tax income by an average of 2.1%, amounting to an average tax hike of $2,100 a household this year.

-- Janet H. Cho, Anita Hamilton, and Liz Moyer

***

Apple Sits at Ground Zero of Trade War

Apple shares fell sharply on Thursday, shedding $313.5 billion in market value as investor fears grew about the iPhone maker's greater exposure to China, which the Trump administration has targeted for stiff tariffs. Global consumer sales make Apple more vulnerable to tariffs than the other Magnificent Seven stocks.

   -- Between 90% and 95% of Apple's products are made in China. Taiwan-based 
      Foxconn, formally called Hon Hai Precision Industry, is the world's 
      largest iPhone manufacturer. Apple has expanded production into Vietnam 
      and India, but they are also targeted for Trump tariffs. 
 
   -- Apple was granted exemptions in 2018 to avoid a 15% tariff on its 
      flagship products including the iPhone, iPad, and MacBook, but there are 
      no indications, so far, that it has received a similar exemption from the 
      latest tariffs. Apple couldn't be reached for comment. 
 
   -- Apple's plans to invest $500 billion in the U.S. may help it get an 
      exemption, Jefferies analyst Edison Lee wrote. He estimated that if all 
      of Apple's Chinese-made iPhones were subject to 54% tariffs, and Apple 
      fully absorbed the hit, its fiscal 2025 net profit would fall 14%. 
 
   -- About 64% of Apple's fiscal 2024 revenue came from outside the U.S. The 
      iPhone, a symbol of American technology, could be targeted by retaliatory 
      tariffs or boycotts, and Apple services like App Stores and iCloud could 
      see higher foreign tax rates. 

What's Next: Wedbush analyst Dan Ives estimated that it would take three years and $30 billion to move "even 10%" of Apple's supply chain from Asia to the U.S., and iPhone prices would triple from $1,000 to $3,500 if they were U.S.-made.

-- Adam Clark, Adam Levine, and Janet H. Cho

***

Cracks Are Showing in GOP Over Blanket Measures

Signs of strain are emerging as President Donald Trump's executive decisions test how far Republican lawmakers and his allies in business will bend out of blind loyalty to the White House. There's been a mini-rebellion among GOP Senators this week in a push back to Trump's tariffs.

   -- Sen. Chuck Grassley (R., Iowa) joined Sen. Maria Cantwell (D., Wash.) on 
      legislation saying all unilateral tariffs proposed by the president 
      expire in 60 days unless Congress approves them. Earlier, four GOP 
      Senators sided with Democrats on a resolution to eliminate the 25% 
      tariffs on Canada. 
 
   -- Neither of the bills is likely to be taken up by the House, but they are 
      an early signal that Trump's tariffs have unsettled some erstwhile GOP 
      allies and lawmakers, who might soon face voters. Reliable outside 
      backers of other GOP priorities came out swiftly against the tariffs. 
 
   -- The Business Roundtable and the Chamber of Commerce both said they risk 
      causing major harm to companies, workers, and exporters. Right-wing 
      advocacy group Club for Growth said the levies mean Republicans "are 
      likely to lose their majorities in the midterm elections unless immediate 
      pro-growth action is taken." 
 
   -- Significant cracks to Trump's support could start in the farm belt, said 
      L. Thomas Block, Washington policy strategist at Fundstrat Global 
      Advisors. Farmers are expected to export more than $170 billion worth of 
      soybeans, corn, and other farm products this year, but tariffs could 
      derail those plans. 

What's Next: Retaliation by other countries will pressure lawmakers from the Farm Belt, including Senate Majority Leader John Thune (R., S.D.). Department of Agriculture Secretary Brooke Rollins told reporters there "will be a short time of uncertainty, and then we'll move back to the prosperity that this president has envisioned."

-- Joe Light

***

Closing Exemption Loophole Could Slam China's Temu, Shein

As part of the administration's new tariffs, President Trump has killed the exemption for packages of merchandise valued under $800 and mailed to the U.S. from China and Hong Kong, something that merchants have used to avoid extra tariffs. The change will most affect Chinese online retailers Temu and Shein.

   -- Millions of Chinese merchants who sell lower-cost clothing, toys, and 
      electronics to Americans will face more complex logistics, such as bulk 
      shipping, warehousing costs, and paying duties upfront. Some Chinese 
      merchants are eyeing other potential markets like Southeast Asia. 
 
   -- They don't have much time to prepare. The so-called de minimis tariff 
      loophole ends May 2. Imported goods that previously were exempt face a 
      tariff of either 30% of their value or a per-item fee of $25 that goes up 
      to $50 on June 1. 
 
   -- The Trump administration tried closing the loophole in February, but 
      backed down after the announcement caused chaos at ports, post offices, 
      and customs offices. The measure is meant to protect domestic industries, 
      curb allegedly unfair trade practices, and stem the flow of opioids from 
      China. 
 
   -- The change will increase prices and could add shipping delays for U.S. 
      consumers who currently enjoy free or minimal shipping costs on goods 
      sent directly from factories. The new policy, along with higher tariffs 
      on Chinese imports, will make a dent in Shein and Temu's competitive 
      advantage, BTIG Janine Stichter recently wrote. 

What's Next: Morgan Stanley analysts believe the changes could benefit American retailers, especially off-price outfits such as Ross Stores, TJX, and Burlington Stores. Dollar stores could also gain, though they are more exposed to the new reciprocal tariffs.

-- Sabrina Escobar and Janet H. Cho

***

Do you remember this week's news? Take our quiz below to test your knowledge. Tell us how you did in an email to thebarronsdaily@barrons.com.

1. President Donald Trump's "Liberation Day" tariff announcement threatens to end globalization built around Asian supply chains. China, the second largest global economy, now faces U.S. import duties of how much?

a. 54% b. 44% c. 34% d. 24%

2. After a wave of protests about Tesla CEO Elon Musk's extracurricular activities as advisor to President Donald Trump, evidence of a consumer backlash against the Tesla brand is growing. The electric vehicle maker's first quarter deliveries fell by how much?

a. 3% b. 10% c. 13% d. 16%

3. More potential buyers are emerging for video-sharing platform TikTok as the deadline for the app, which is owned by a Chinese parent company, to be sold approaches. Which of the following are said to be in the running?

a. Amazon b. AppLovin c. Oracle d. None of the above

4. Two influential proxy-advisors, whose guidance shapes how investors vote on corporate governance issues, are recommending that Goldman Sachs shareholders vote against pay packages for the Wall Street bank's top executives. How much are the retention packages?

a. $60 million b. $80 million c. $100 million d. None of the above

5. Rocket Cos. extended its deal spree with a $9.4 billion acquisition of Mr. Cooper Group, which will significantly boost its business in which of the following areas?

a. Real estate listings b. Mortgage origination c. Mortgage servicing d. Home building

Answers: 1( a); 2( c); 3( d ); 4( b ); 5( c )

-- Barron's staff

***

-- Newsletter edited by Liz Moyer, Patrick O'Donnell, Callum Keown

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

April 04, 2025 07:14 ET (11:14 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.