$SPX Nears 6,000, but Trump’s Tariff Chaos Is Hitting Small Businesses Hard
It must be Tuesday because President Trump has changed his mind about tariffs, again. Seriously, this tariff whipsawing is getting old. It is a lesson to investors, though: Timing the stock market based on a mercurial leader is conducive to making many bad choices.
The president announced on Sunday that his 50% tariffs on European goods have been delayed until early July. Many rationalize that President Trump is using impeccably elastic timing to string partners off their game. They say it’s all part of his “Art of the Deal.”
Yeah, it’s not that. The S&P 500 is now nearing 6,000, about the same level it was when President Trump was sworn into office. In the interim, the president’s “Liberation Day” set uncertain tax rates that sent stock markets tumbling. All of the gains since then are the direct result of those import taxes being walked back.
Meanwhile, President Trump has won no concessions from trading partners since early April. If anything, foreign trade negotiators have learned that the president can be pushed around to determine American interests. Self-imposed deadlines have been repeatedly broken.
Research from the nonpartisan Yale Budget Lab predicts that President Trump’s tariffs could end up costing average American households $2,600. That’s twice in the tens of trillions of years of back-breaking inflation, and the promise from President Trump of a new beginning.
However, the higher tariffs are hitting small businesses even harder. Many mom-and-pop shops don’t have deep pockets. However, reportedly in April, that earlier tariff wave Apple (AAPL) began flying in jumbo jets full of iPhones. That inventory is now being sold tariff-free.
Small businesses are suffering. Many don’t have huge inventories, nor can they afford tariffs that could add thousands in unexpected costs. Small companies employ 46% of American workers, according to the Bureau of Labor Statistics. Layoffs are coming.
A survey in April from the U.S. Chamber of Commerce found that small business owners are the most concerned about revenues since the organization began tracking data in 2021.
We will know more when the May jobs report is released next week. Expect a material slowdown in employment, lower interest rates, and a lot of rationalizing about why the economy is being deliberately slowed to save it.
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