Approximately $2.5 trillion vanished from the S&P 500 Index on Thursday due to concerns over President Donald Trump's new tariffs potentially triggering a recession. Companies heavily relying on overseas manufacturing for their supply chains were hit hardest, with Apple Inc. dropping by 9.3% as they produce most of their US-sold devices in China. Lululemon Athletica Inc. and Nike Inc., connected to manufacturing in Vietnam, also saw over 9% declines. Retailers like Target Corp. and Dollar Tree Inc., sourcing products from outside the US, experienced drops exceeding 10%.

This decline affected nearly all US stocks, marking the largest loss for the benchmark since June 2020. More than 80% of S&P 500 companies saw drops, with over two-thirds falling by at least 2%. The wide-ranging impact of the tariffs is more severe than those imposed in Trump's previous term, potentially disrupting global supply chains, worsening economic slowdown, and increasing inflation. Investors are uncertain about how the tariffs will affect corporate profits.

For instance, Citigroup analysts led by Atif Malik estimated that if Apple absorbs the higher costs due to China tariffs, its gross margin could decrease by up to 9%. The tariffs are likened to the biggest tax increase since 1968 by JPMorgan economist Michael Feroli, potentially raising prices by up to 1.5% this year according to the Federal Reserve's preferred inflation measure, while dampening personal incomes and consumer spending.

The economy could be at risk of nearing a recession due to the tariffs' impact, as noted by Feroli. On announcing the news, US assets took the biggest hit, with the S&P 500 plummeting by 4.8% and the dollar weakening. In contrast, the impact was less pronounced in other regions: Asian stocks slightly dropped by less than 1%, while the Stoxx Europe 600 fell by 2.6%, and the euro gained approximately 1.6% against the dollar.