How Tariffs Are Impacting 5 Different Stock Indexes

The stock market hates uncertainty. It’s no wonder, then, that the tariff-induced uncertainty that has marked 2025 has impacted it.

President Donald Trump has announced specific tariffs on imports of certain products and retaliatory tariffs on trading partners who impose tariffs on U.S. goods. He has paused these retaliatory tariffs, hoping to negotiate deals with these trading partners.

However, as the end of the 90-day pause approaches, no one is sure what will happen next.

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China was initially excluded from this pause, leading to a trade war between the two countries. Recently, the two countries agreed to pause the exorbitant tariffs they imposed on each other for 90 days. A few days afterward, the U.S. accused China of violating the truce, and China accused the U.S. of doing the same.

In all, no one knows what the future holds for U.S.-China trade relations.

Let’s examine how the U.S. stock market has responded to this tariff seesaw, starting with the overall U.S. market via the S&P 500 and the Dow Jones U.S. Total Stock Market Index, and then focusing on three stock sectors that have also been impacted:

— Impact of tariffs on the S&P 500.

— Impact of tariffs on the Dow Jones U.S. Total Stock Market Index (DWCF).

— Impact of tariffs on the Industrials Select Sector Index.

— Impact of tariffs on the Technology Select Sector Index.

— Impact of tariffs on the Consumer Discretionary Select Sector Index.

Impact of Tariffs on the S&P 500

On Feb. 1, Trump announced 25% tariffs on imports from Mexico and Canada, and an additional 10% tariff on Chinese goods. When these tariffs went into effect on March 4, the S&P 500 fell into a 4.4% slide between March 4 and 13 (including a 2.7% drop on March 10), entering into market correction territory (a more than 10% drop from a previous swing high) for the first time since 2023.

When the quarter ended on March 31, the S&P 500 had posted its worst one-quarter result since 2022.

Trump further unveiled his comprehensive tariff plan on April 2, a day he referred to as “Liberation Day.”

For the S&P 500, that name could only have been ironic. The next two trading days (April 3 and 4) saw it lose 10.5% of its value, its fifth-biggest two-day decline since 1950.

By April 8, the index had fallen by 12.1% (for a total of -15.1% year to date) and crossed below 5,000 for the first time since April 2024.

On April 9, the Trump administration announced a 90-day pause on the reciprocal tariffs that had been unveiled a week prior, calming markets. But the exclusion of China from the pause and the imposition of a total of 145% tariffs on Chinese goods caused another slide in the S&P 500.

Some more calm returned when Trump excluded Chinese smartphones, computers and certain electronics from the tariffs on April 12. However, two days later, Federal Reserve Chair Jerome Powell expressed concerns about Trump’s tariffs, and the S&P 500 fell by 2.2% between April 16 and April 21.

Since then, Trump has walked back critical comments about Powell, and the U.S. and China have come to the negotiating table. Consequently, the S&P 500 has been on an upward trend, and its year-to-date return is 1.7% as of June 17.

Impact of Tariffs on the Dow Jones U.S. Total Stock Market Index (DWCF)

DWCF has experienced a similar trajectory to the S&P 500.

The index fell by 10.7% between Feb. 19 and March 13 as the market dealt with the impact of Trump’s tariffs on Mexico, Canada and China.

A worse dip (-12.4%) would occur between April 2 and 8, in response to Trump’s Liberation Day tariffs. The 90-day pause sent some relief to the market, but China’s exclusion and Powell’s statements would cause another 5.4% slide between April 9 and April 21.

Like the S&P 500, DWCF has been on a positive trend since April 21, and its year-to-date return is in positive territory (1.2%) as of June 17.

Impact of Tariffs on the Industrials Select Sector Index

On March 12, broad 25% tariffs on steel and aluminum imports went into effect (announced on Feb. 10). These tariffs doubled as of June 4, with the U.K. as an exception for now. This has led to higher construction costs, and many contractors are putting new construction on hold as they grapple with rising costs.

The real estate industry is also dealing with the impacts of the pause on interest rate cuts and high mortgage rates. No wonder, then, that executives in the industry do not have a positive outlook on its prospects in 2025, according to Inc.com.

Higher steel and aluminum prices will also affect the manufacturing industry, as it also must grapple with rising raw materials costs and lower profit margins. The anticipated supply chain disruptions that the tariffs entail will also cause operational costs to rise.

It is no surprise, then, that the Industrials Select Sector Index has followed the same trajectory as the S&P 500.

A day after the 25% tariffs on steel and aluminum went into effect, the index fell by 1.5%. This was the culmination of a slide that began on Feb. 19, for a total decline of 7.3%. The industrial sector also reacted to the April 2 announcements, declining by 12.5% between April 2 and April 8.

The index would also temporarily benefit from the 90-day pause, before experiencing a 3.4% slide between April 9 and April 21. Since then, it has been on an upward trajectory, with a year-to-date rise of 7.9% (greater than the S&P 500 and the Dow Jones U.S. Total Stock Market Index).

Impact of Tariffs on the Technology Select Sector Index

The April 2 universal tariffs also included smartphones, computers and electronics. Furthermore, the rise in U.S. tariffs on Chinese imports was not good news for U.S. tech companies that rely massively on Chinese manufacturing. Fortunately, Trump excluded electronics from the 10% baseline tariff on April 11 and from the additional tariffs on China on April 12.

However, on May 23 and May 24, Trump threatened smartphone makers like Apple Inc. (ticker: AAPL) with 25% tariffs if they fail to move production to the U.S., with additional tariffs for the importation of non-U.S. smartphone brands.

Semiconductors have also had a hard time, as the Trump administration initiated a Section 232 investigation into the national security impacts of the importation of semiconductors.

This back-and-forth has been evident in the prices of technology stocks, which have been a key cause of the fluctuation in the S&P 500 (since top tech sectors dominate the index).

The Technology Select Sector Index has followed the same path as the Industrials Select Sector Index, though the quantitative impact of the tariffs has been far greater. It fell by 14.2% between Feb. 19 and March 13, and by 14.3% between April 2 and April 8.

After the temporary relief on April 9, it fell by 7.9% between April 9 and 21. Since then, it has been on a positive ride, and its year-to-date return is currently positive (3.6% as of June 17).

Impact of Tariffs on the Consumer Discretionary Select Sector Index

Automobiles have also been a special target of tariffs. On April 2, a 25% tariff was imposed on passenger vehicles, light trucks and automobile parts. The one on passenger vehicles and light trucks went into effect on April 3, and the tariff on auto parts started May 3.

The film industry was also not spared, as Trump on May 4 announced a 100% tariff on movies produced outside of the U.S.

The prices of retail and consumer goods like electronics, apparel and home furnishings have also been affected by tariffs, even as retail stores struggle with supply chain disruptions.

All of these disruptions have been evident in changes in the Consumer Discretionary Select Sector Index.

Between Jan. 30 and March 13, the index fell by 17.4%. It also responded to Liberation Day with a 13.3% decline between April 2 and April 8. The index participated in the temporary relief on April 9 before sliding by 7.7% between April 9 and April 21. Though things have calmed since April 21, its year-to-date return is still in negative territory (-6.4%) as of June 17.

Uncertainty Weighs On Consumers and Stocks

Though the financial markets have been stable since April 21, the unpredictability of the whole tariff business means investors aren’t sure what will happen next. The general 90-day reprieve will end after July 8, and the fresh one with China will end by Aug. 12. Whether a lasting deal will be sought or previous tariffs restored, no one can say for certain.

As we have seen, it is not just the actions being taken that matter; the presence of uncertainty itself is a negative that drags down consumer confidence and the stock market.

Investors with low risk tolerance or a negative outlook on the U.S. economy (due to uncertainty) may want to prioritize defensive sectors, gold, shorter-term fixed securities, true portfolio diversification and cash (in pursuit of good stocks with falling prices).

However, before making any decision, ensure you speak to your financial advisor for more personalized recommendations.

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How Tariffs Are Impacting 5 Different Stock Indexes originally appeared on usnews.com

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