Getty Images; Alyssa Powell/BI
The retail investing community is highly concerned about Trump's recent tariffs. US stocks plunged following the president's imposition of new tariffs on US imports, especially reciprocal duties. Traders expressed their distress online over their financial losses and feared that a bear market might be looming. There is clear evidence of panic among online retail traders due to the ongoing trade war.
Average investors flooded social media platforms on Thursday to share their worries about the negative impact caused by the recent tariffs imposed by the president, resulting in a significant drop in stock prices. By 11:00 a.m. ET, the market decline worsened, with the S&P 500 dropping by more than 4%, the Dow plummeting over 1,500 points, and the Nasdaq 100 sliding over 5%. As investors sought safer investment options, bond yields also decreased, with the 10-year US Treasury yield reaching its lowest level since October after falling by 18 basis points.
The retail investors were taken by surprise by the broad scope of the new tariffs, which included a 10% base tariff on all US imports and a 54% tariff on Chinese goods. During a presentation in the White House Rose Garden on Wednesday, Trump displayed a board illustrating the extent of the tariffs affecting numerous US trading partners.
Some users on the popular r/WallStreetBets subreddit expressed dismay over their substantial losses as the market started to decline on Wednesday. One user even declared bankruptcy after investing in Nike calls before the tariffs were announced, leading to a 12% drop in Nike stock by mid-day Thursday due to the impact on multinational companies with global supply chains.
The sentiment among retail traders has turned negative since the beginning of Trump's second term. Initially, the markets welcomed Trump's return to the White House; however, concerns arose as he escalated the trade war beyond initial expectations. Excitement over the president's growth initiatives has been overshadowed by fears of a trade war's impact on inflation and economic growth.
One Reddit user speculated that the market damage could extend, potentially ushering in a bear market if stocks decline by 20% from their peak. The user predicted potential consequences of the global trade changes, such as high inflation and job losses that could lead to an extended period of stock market downturn.