Wall Street Tumbles as Trump’s Tariffs Spark Corporate Panic and Stagflation Fears

US stocks have been declining since the start of trading on Tuesday, influenced by statements from American companies laden with messages of uncertainty regarding the expected impact of the Trump administration’s trade policies and the potential economic damage and losses these companies may face due to customs tariffs.

These statements came within the framework of earnings reports issued by these companies about their financial performance in the first quarter of this year. Ford, the American automotive giant, did not issue its future guidance due to the adverse conditions it anticipates facing in the coming period.

The Dow Jones Industrial Average fell to 40,914 points after shedding more than 300 points, or 0.8%. The S&P 500 also dropped to 5,613 points after losses of about 36 points, or 0.7%. Meanwhile, the tech-heavy Nasdaq retreated to 17,706 points after giving up 137 points, or 0.8%.

Fears of the US economy entering a state of stagflation added to the negativity afflicting Wall Street stocks, fears that escalated following the release of a batch of negative economic data.

The US trade deficit recorded a historic figure of -$140.5 billion in April, compared to the previous month’s deficit of -$123.2 billion, which was wider than market expectations of -$129.00 billion.

The stark trade deficit recorded last month is one of the most significant factors likely to negatively impact GDP readings, sparking negativity in global financial markets, especially since it comes just days after the release of the US GDP reading for the first quarter of this year, which highlighted an economic contraction of -0.3%.

Ford estimated that the impact of customs tariffs on its revenues and profits this year would amount to approximately $2.5 billion, further fueling market negativity despite the company’s assurance that it could offset about $1 billion of these expected losses.

Similarly, Palantir Technologies’ defense technology earnings aligned with market expectations, but the company experienced a revenue decline to levels below LSEG forecasts.