The Reporter Notebook: Tariffs vs. the Stock Market

Fortune

Fortune reporter Gregory McKenna touched on how President Donald Trump's tariffs have some people worried about an upcoming recession—and if investors really think one is coming.

Transcript

00:00If I could come up with one word, it would be tariffs.

00:03Markets are not too happy with Trump tariffs right now.

00:06They're pretty worried about what could be coming down the pipe

00:09when it comes to reciprocal tariffs

00:11that could be announced on April 2nd.

00:13And the biggest thing is that markets simply don't know

00:16what's going to happen and investors don't like that at all.

00:19The famous saying is markets hate uncertainty

00:21and uncertainty is what's sort of dominating right now.

00:24Until we get clarity around what's going to happen

00:27with tariffs and the rest of Donald Trump's economic agenda,

00:30definitely this sort of volatility

00:32is to be expected going forward.

00:34While they might expect growth to slow

00:36compared to previous years,

00:38sources I've talked to and several analysts on Wall Street

00:41aren't necessarily thinking the market

00:43will enter a recession this year.

00:44The investors, the portfolio managers,

00:46the analysts I've talked to aren't necessarily panicking.

00:49They think that this sell-off could reverse

00:51in the near future,

00:52but there's definitely still a lot of uncertainty

00:54and that's what, as the saying goes,

00:56that's what markets hate the most.

00:58When it comes to very targeted tariffs on China,

01:02like during Trump's first term,

01:03that's not necessarily a surprise,

01:06but when it comes to blanket 25% tariffs on all goods

01:10from, say, Mexico and Canada,

01:12that would be something that would deeply disrupt

01:14sort of interconnected supply chains.

01:17There seems to be some level of consensus

01:19on what certain things that tariffs could lead to.

01:21One, you're almost certain to see higher consumer prices

01:25and so that decreases the purchasing power

01:28of the consumer,

01:29whether you're going to the grocery store

01:30or somewhere else,

01:31you're probably buying a little less.

01:32As firms are looking to deploy capital

01:36and make investments,

01:37invest in infrastructure, things like that,

01:39they're not gonna do so until they really know

01:40what the picture's gonna look like.

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