JUANA SUMMERS, HOST:
U.S. stock markets just ended their worst day in five years. Investors, businesses and consumers are all just trying to process the damage that President Trump's newest sweeping tariff plan could do to the global economy. The investment bank JP Morgan, on Thursday, warned that if the tariffs are sustained, it will push both the U.S. and the world into a recession. NPR financial correspondent Maria Aspan joins us to explain. Hi there.
MARIA ASPAN, BYLINE: Hi there.
SUMMERS: Maria, today, the S&P 500 and the Nasdaq had their biggest one-day loss since the start of the pandemic. Explain the scope of the damage here.
ASPAN: It was a blood bath. U.S stock markets lost trillions of dollars. The Dow Jones fell almost 1,700 points. The tech-heavy Nasdaq and the S&P 500, which tracks the largest U.S. companies, did even worse percentage-wise. But investors were selling out of lots of other kinds of assets, too. The dollar fell. So did oil prices. Even the price of gold, which is seen as a safer investment in times of crisis, fell back a little from its recent highs.
SUMMERS: President Trump has been talking about these tariffs for weeks now, so why were investors so surprised?
ASPAN: Well, investors seemed shocked by how draconian they are. The president has ordered a minimum 10% tax on nearly all imports, starting this weekend. But he's also imposing much higher tariffs on goods from dozens of countries. For example, goods from China will now be taxed at more than 50% when you add Trump's new tariffs to the ones he's already imposed.
I talked to Chris Fasciano, who's the chief market strategist for Commonwealth Financial Network. He said that the market reaction today is partly about just how bad these tariffs seem and also about the fact that though Trump has previewed them for weeks now, nobody knows if this is the full extent of the damage.
CHRIS FASCIANO: There's just so much uncertainty out there about what the endgame is and what things are going to look like that until that's understood, I think it's really hard for consumers to make decisions about their spending patterns.
ASPAN: And it's hard for businesses and investors to also know where to put their money.
SUMMERS: I mean, we are seeing just mounting warnings that these tariffs will hike prices for consumers and create lasting economic damage. Who's on the front lines?
ASPAN: Consumers are likely to pay more for a wide range of products, from cars to groceries. Some of the things that we import from abroad, like coffee or bananas, just can't be grown here in the same quantities we need. That's going to be true no matter how many manufacturing jobs the tariffs are intended to bring back to the United States. So today, we saw investors and a lot of household-name companies process the hurt they're going to take, especially retailers that import materials or goods from abroad. Shares in Nike, Apple and Amazon all plunged, losing billions of dollars in market value.
And then there was Restoration Hardware. CEO Gary Friedman was on a public conference call with analysts this morning when he checked how his company's stock was reacting to the tariffs. And, well, we can't broadcast his full reaction.
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GARY FRIEDMAN: Oh, really? Oh, [expletive]. OK. OK. Look - I just looked at the screen. I hadn't looked at it.
ASPAN: He had just seen that his company's stock was down 40%. That's because it sources most of its furniture and other products from Asia.
SUMMERS: I mean, these are really scary numbers in the market, and they affect our retirement accounts and other savings. I'm trying not to look right now, but you tell us, what should we all do?
ASPAN: I would say don't look. I mean, I asked Fasciano this today, and he basically said don't panic.
FASCIANO: Timing markets is hard, if not impossible. I really think trying to make short-term decisions based on headline and noise is challenging.
ASPAN: His advice, and that of other financial experts I've spoken with this week, is to make sure you have a balanced and diversified portfolio - so not just stocks - and to stick to your long-term plan. Also, as scary as today is, it is a one-day reaction that could be reversed tomorrow or in a week's time. There are a lot of variables. It's also worth remembering that the market is not the economy, but we will get some clearer information tomorrow about how the economy is doing right now when the government publishes its monthly jobs report.
SUMMERS: That is NPR's Maria Aspan. Thank you.
ASPAN: Thank you. Transcript provided by NPR, Copyright NPR.
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