US tech and retail stocks lead the rout following Trump's tariff blow

Apple, Walmart and Nike are among the U.S. megacap tech companies that led to a global meltdown after President Donald Trump announced new tariffs. The fears about a cost spike across many industries were heightened by these new tariffs.

The tariffs threaten to disrupt the global trade order and upset businesses. This is a stark contrast to just a few short months ago, when the hopes for business-friendly policies from the Trump administration drove U.S. stock prices to record highs.

Trump announced that he would impose an initial 10% tariff on all imports into the United States, and increased duties on dozens more countries. This will push U.S. Tariffs to their highest level in over a century.

Analysts and economists have warned that tariffs on Asian imports, and possible retaliatory actions could disrupt global supply chains. This would also affect corporate profits.

Brett Ryan, Senior US Economist at Deutsche Bank, said that these actions could reduce the growth of (U.S.). This would raise recession risks.

The Dow Jones Industrial Average dropped 3.60%, and the benchmark S&P500 lost 4.24%.

TECH HARDWARE SEMICONDUCTORS

Apple's share price fell by 8.6%. Citi estimates that more than 90% of Apple's manufacturing is located in China, which is one of the countries hardest hit by tariffs.

Rosenblatt Securities estimates that iPhone maker Apple could face tariff costs of $39.5 billion. They add that "if Apple just ate these costs, we estimate that operating profit and earnings per share would be hit by 32%, annualized."

Also, PC and AI server makers will be affected. According to Census Bureau statistics, the U.S. imported almost $486 billion worth of electronics in 2017. This was the second largest sector for imports after machinery.

Tony Redondo, founder of Cosmos Currency Exchange, stated that PC manufacturers, such as Dell and HP, may face price increases between 10%-25% and $200-500 per unit.

This would force the companies to increase prices or squeeze their margins, which could further damage PC demand, already a bit choppy over recent years. Dell and HP shares were down by about 15% and 13%, respectively.

Tariffs could also make AI servers more expensive, adding potentially millions of dollars in additional costs and disrupting AI development plans for Big Tech.

Microsoft and Alphabet both fell by 2.6%.

Analysts said that although semiconductors were not included in the list, they would be subject to the 10% base duty regardless.

The iShares Semiconductor ETF fell 7.2%.

RETAIL PAIN

Walmart, Amazon, and Target are among the major U.S. retailers that have seen their prices fall between 4% to 11%. These retailers rely on several Asian countries, including China, as suppliers, and may be forced into raising prices.

China, one of the world's major production centers, was hit by an aggregate tariff rate of 54%. Vietnam received a tariff of 46%, Cambodia a rate of 49%, and Indonesia - 12%.

Lululemon, a sportswear retailer, and Nike saw their sales decline by 13% after they were forced to pay steep taxes on key suppliers.

Jefferies analysts wrote in a report that "all footwear and apparel companies will see their margins affected by rising costs, especially as Asian production hubs are particularly hard hit."

The S&P 500 Retail Index fell 6.8%, reaching its lowest level since September 2024.

Big Banks

Wall Street banks including JPMorgan Chase & Co, Citigroup, and Bank of America Corp that are sensitive to risks in the economy have fallen between 7% and 11 %.

The decline in equity valuations and a muted M&A recovery, along with IPOs and M&A, has raised concerns that investment banking revenue could be under pressure. A weaker consumer confidence could also dampen spending, affecting loan demand.

Citizens Financial, US Bancorp and other regional banks also saw their shares fall.

The S&P 500 bank index fell 8.4% while the KRW Regional Bank Index dropped 8.8%.

AUTO INDUSTRY

Ford and General Motors both saw their shares fall, by 4.2% and 3.1% respectively, due to the impending auto tariffs on Thursday.

Rivian and Lucid, two electric vehicle manufacturers, fell by 5.3% and 2.3% respectively. Tesla traded 7% lower.

Anderson Economic Group estimates that tariffs will cost up to $20,000 more for certain imported models, and an extra $2,500-5,000 for American cars with the lowest prices. The impact on the U.S. consumers is expected to be $30 billion in the first year.

Ford has announced discounts on several models beginning Thursday. Ford is relying on its large inventory to offer thousands of dollars in savings to customers as competitors raise prices to absorb tariffs.

PHARMACEUTICALS

The tariffs on pharmaceuticals have been temporarily suspended, allowing shares in major drugmakers Pfizer & Johnson & Johnson and other companies to survive the early market turmoil.

J&J's shares rose by 3% while Amgen, Merck and Merck each rose 1%.

Trung Huynh, an analyst at UBS, said that pharma is not "out of trouble" yet. Huynh stated that Trump is "willing to make changes" in the pharmaceutical industry. This could be a new round of tariffs, or a gradual approach in levying duties.

Reports earlier this week stated that U.S. pharmaceutical companies are lobbying Trump for a gradual introduction of tariffs on imported products. They hope to reduce the impact and allow time to switch manufacturing.

The shares of Dexcom, a maker of glucose monitors, and GE Healthcare dropped nearly 9%. These two companies led the declines among U.S. medical devices firms whose supply chain and revenues were at risk due to the tariffs imposed by China, the European Union, and Mexico.

ENERGY

The price of crude oil and energy stocks fell sharply Thursday, despite the fact that imports of gas, oil and refined products were exempted by Trump's new tariffs.

Brent crude and U.S. WTI fell more than 7% during afternoon trading. This weighed on stocks of oil refineries and oilfield services.

The segment's top losers were producers APA and Devon Energy, oilfield services company Halliburton, and refiner Valero.

Henry Hoffman, coportfolio manager at the Catalyst Energy Infrastructure Fund, said that despite energy not being on the list, crude oil prices are under clear downward pressure. This is mainly due to renewed fears about a global slowdown.

Investors are concerned that aggressive tariffs could further reduce demand growth in the world, he added. OPEC’s sudden decision to increase output has exacerbated soft markets.

(source: Reuters)