What started off as Turnaround Tuesday ultimately became Downturn Tuesday for Wall Street, with the S&P 500, Nasdaq, and Dow Jones all dropping, after the Trump Administration said it will impose a 104% tariff on China beginning at 12:01 a.m. ET Wednesday.
White House Press Secretary Karoline Leavitt confirmed the plan at a press briefing on Tuesday afternoon, saying “the jig is up” for countries looking to one-up the U.S. on trade deals. Her confirmation came a day after President Trump said he would be hitting China with an additional 50% tariff, following the Chinese Communist Party saying it would slap a 34% fee on American goods.
The stiff tariffs appeared to be the key reason the market did a sudden 180. The day started off with all three major indexes jumping more than 3.4%, following news President Trump has been negotiating with about 70 countries on his new tariff policy. Leavitt said countries are “falling over themselves” looking to make trade deals with the U.S., but her comments on the Chinese tariffs appeared to be what ultimately swung the market.
When markets closed on Tuesday, the S&P 500 dropped 1.57%, the Nasdaq declined 2.15%, and the Dow Jones dropped 0.84%.
Apple, which dropped another 5.44% percent on Tuesday, has now shed nearly $1 trillion from its market cap since Trump announced his “liberation day” tariffs last week. The company has gone from being worth $3.54 trillion last Wednesday to $2.57 trillion when trading finished on Tuesday.
Other major tech and media companies took a hit on Tuesday as well.
Roku: -4.99%
Meta: -2.50%
Google: -2.48%
Comcast: -2.82%
Netflix: -0.86%
Disney: -2.76%
WB Discovery: -5.62%
Notably, all of the companies mentioned above started off Tuesday with solid gains, before the market U-turned. The markets had started off hot on Tuesday, after Politico reported on Monday evening that Treasury Secretary Scott Bessent has encouraged the president to use the tariffs as leverage to negotiate “favorable trade deals” with other countries.
“You’re not going to abandon the policy, but you have to talk about negotiating and what the endgame is,” was Bessent’s message to the president, an unnamed source told Politico.
Within a half hour of the markets opening on Tuesday, President Trump shared a Truth Social post saying he had a “great call” with South Korea that led to the “confines and probability of a great DEAL for both countries.”
“Their top TEAM is on a plane heading to the U.S., and things are looking good,” President Trump said. “We are likewise dealing with many other countries, all of whom want to make a deal with the United States. Like with South Korea, we are bringing up other subjects that are not covered by Trade and Tariffs, and getting them negotiated also.”
The president added China wanted to “badly” make a deal, “but they don’t know how to get it started. We are waiting for their call. It will happen. GOD BLESS THE USA.”
