Tariff Wars: Biden's Reawakening - What It Means for US Stock Exchanges!

Tariff Wars: Biden's Reawakening - What It Means for US Stock Exchanges!

Economist of the University of Paderborn have looked closely at the impact of the tariffs announced by Donald Trump during his first presidency on the stock prices of over 1,000 US companies. The research results show alarming trends: the average share prices of the companies studied suffered significant declines, indicating a loss of value on the stock market. These negative wealth effects occurred regardless of the type of tariffs, whether to protect domestic industries or as retaliatory measures from other countries.

The impact of tariff announcements affecting China was particularly serious. University officials warned that renewed tariff adjustments at the start of the second Trump presidency could have long-term negative consequences for the US stock market. The study, published in the journal Finance Research Letters, analyzed 4,624 tariff announcements from January 2017 to January 2021 and found that the strength of negative stock price reactions depends heavily on sector, tariff, trade and company-specific characteristics.

Current developments and global reactions

When Trump took office on January 20, 2025, he initiated immediate actions, including 25% tariffs against Canada and Mexico, but these were suspended shortly after they were announced. In March 2025, tariffs on steel and aluminum imports increased to 25%, affecting all countries. China was hit with tariffs of 10% and 20% in response to insufficient progress in the war on drugs. These moves have created uncertainty on global stock markets and worried investors as markets react to geopolitical developments.

Additionally, 25% tariffs on non-U.S.-made cars were announced on March 26, 2025, and reciprocal tariffs were implemented for over 180 countries starting April 2, 2025 to create a balanced trading environment. The EU responded in harmony with the US tariffs with its own tariffs on US goods worth 26 billion euros.

The negative consequences of this customs dispute are already being felt. Trade relations are disrupted and companies face higher production costs as tariffs reduce competitiveness. This would typically allow consumers to pay higher prices for imported goods, which would reduce their purchasing power.

Long-term economic impact

The burdens caused by trade wars and protectionist measures have far-reaching consequences for the global economy. Loud Nadr Tensions between major trading partners lead to uncertainty on international markets. Forecasts indicate slightly negative growth rates: China -0.5%, Germany -0.3% and the USA -0.2%. In order to counteract these negative trends, peaceful solutions between the parties to the conflict are crucial.

Companies and governments therefore have a responsibility to take appropriate measures. Strategies such as diversifying trading partners and building stable supply chains are essential to reducing risks. Experts also recommend holding bilateral talks and strengthening multilateral trade agreements to counter uncertainties and support sustainable economic development.

Overall, recent tariff and trade measures have the potential not only to cause short-term instability, but to cause profound long-term damage to the global economy.