The ripple effects of Donald Trump’s global trade war are increasingly spreading across a wide range of industries, and on Wednesday they again weighed on U.S. stocks that have been roiled for weeks by his erratic trade policies.
Stocks fell across the board, with technology stocks hit particularly hard as bellwether Nvidia, which is closely tied to global supply chains, warned that its profits would take a hit.
Meanwhile, airlines said they were bracing for an uncertain summer travel season and the Federal Reserve chairman also noted that economic activity was slowing but was also wary of the threat that tariffs pose to its lower inflation target.
While Trump said many countries were lining up to reach a deal with the United States, progress was slow and uncertain. The president was scheduled to hold in-person talks with Japan on tariffs later on Wednesday.
Although the market volatility that erupted two weeks ago has subsided, business leaders still say uncertainty is hindering spending plans. The world’s two largest economies, the United States and China, remain in a full-blown trade war, and the progress of U.S. negotiations with the European Union, Canada and other countries is unclear.
“What was true yesterday is no longer true today, and I don’t know what it will be tomorrow,” said Jean-Christophe Babin, CEO of Bulgari, the jewelry subsidiary of luxury giant LVMH, referring to U.S. tariff policy.
Tech Stock Selloff
Tech companies were the focus of controversy on Wednesday. AI chip giant Nvidia said it would incur $5.5 billion in accounting charges for sales to China due to the U.S. government’s restrictions on AI chip exports. ASML, the world’s largest supplier of computer chip manufacturing equipment, said tariffs have led to uncertainty about the outlook for 2025 and 2026. Industry insiders told lawmakers last week that other U.S. chip equipment manufacturers could suffer losses of about $1 billion a year from tariffs.
Stocks fell again across the board on Wednesday, with the tech-heavy Nasdaq Composite Index down 3%, led by Nvidia, which fell 7%. Another chipmaker, Advanced Micro Devices (AMD), said the U.S. government’s restrictions on sales to China would cost it $800 million.
Even more optimistic companies have tempered their enthusiasm. United Airlines maintained its 2025 profit forecast but, unusually, laid out two scenarios for this year, saying the “macro environment for this year cannot be predicted with any confidence”.
Japan is currently leading the talks, but a scheduled meeting between Japanese Economic Revitalization Minister Yoshiaki Akasawa and U.S. Treasury Secretary Scott Bessant turned into a meeting with Trump himself on Wednesday night. The U.S. president said he would attend the talks in person to discuss other non-trade topics as he continues to focus on the U.S. trade balance with other countries.
Japan exports more than 1 million vehicles to the United States each year, especially economy models, whose prices could rise by thousands of dollars if tariffs remain. Some automakers have offered to move some production to the United States, but that will not be easy.
“We need a pause in tariffs for a period of time so that we can organize for localization … and move our supplier base to the United States,” Christian Meunier, chairman of Nissan America, told Reuters, adding that the process would take years.
Race against time
Federal Reserve Chairman Jerome Powell, speaking in Chicago, noted that the economy is slowing but added that “inflation is likely to rise as tariffs are implemented and part of them are paid by the public.”
U.S. consumer confidence has deteriorated sharply since mid-February, when Trump stepped up his tariff rhetoric.
Bank CEOs have said in recent days that consumer spending hasn’t fallen sharply, but cracks are starting to show. Retail sales were strong in March, helped by the best auto sales since 2023, but other spending items were weak, while spending on services may be starting to fall as people buy goods in large quantities due to concerns about rising prices.
Retailers are also aware of the possibility, with Chinese discount retailers Temu and Shein encouraging shoppers to buy “at today’s prices” and saying in nearly identical letters that they will raise prices starting April 25.
Spending on goods and equipment to and from the U.S. could also face a bumpier road.
“Throughout March, everyone was busy getting stock,” said Marko Bebek, sales manager at LB White, which makes pig housing equipment in the U.S. and sells it in Canada.
