It seems that some parts of corporate America may finally have had enough of the drama that the administration is causing in the markets.
Last week tariffs were imposed on Mexico and Canada, then amended, then delayed. On Friday the president threatened Canada, the country’s closest ally, with a two hundred and fifty per cent tax on dairy, moments after saying the levees would not apply to anything already covered by USMCA.
The markets reacted accordingly, losing ground across the board. The impact has been felt far and wide, with conversations with the wait staff at restaurants to investment professionals all turning to tariffs and to the yo-yo-ing markets. And on Monday the trend has continued, with the S&P 500 suffering losses after the president failed to rule out the possibility of a recession as a result of the tariff strategy. Many investors believe it’s time for business leaders to exert some of their influence to help stabilize the economy and markets.
Jeff Blazek, co-CIO of multi-asset strategies at Neuberger Bergman, said the challenge is to figure out the strategy behind all the moves. “It feels worse that it might be a permanent, structural change and really reorienting and altering the world order when it comes to trade, and that’s a bigger risk to us,” he said. “Clients are asking a lot of questions, almost daily, because it’s obviously now driving strong equity weakness and causing a pretty material drop-in interest rates around the world.”
Economists agree that implementing tariffs will drive costs up for consumers.
Seamus Smyth, chief developed markets economist at Virtus Investment Partners, said that all the back and forth could be very disruptive economically.
“It’s an extraordinarily disruptive set of tariffs economically, and one that I think has the potential to be much more economically disruptive than the 2018 tariffs,” he said, adding that those were largely on final goods coming into the country, not components and materials, and therefore not as harmful for U.S. companies. “But when you’re getting into an intricate value chain, it is much more concerning.”
Last week the S&P 500 saw its sharpest weekly decline since September, marking its third week in a row with drops of over three percent.
Although Target CEO Brian Cornell and others have said that tariffs will increase prices, many in finance are watching to see when companies most affected by the tariffs will push back in force.
“Well, I think that’s going to be now,” said Blazek, referring to the biotech company Ilumina which has been an unexpected casualty after China effectively banned the gene mapping company in retaliation to the latest round of tariffs. China accounted for seven percent of the company’s sales in 2024, causing its share price to fall 35 percent drop.
“I’m sure management will be out there pleading, crying uncle that this is not good for anyone,” he added.
Many believe the auto industry will be hard hit by tariffs. On February 5, the president said tariffs on autos will be delayed a month, but U.S. car manufacturing companies import a significant amount of their materials, which will put pressure on margins.
“The auto industry is going to get more outspoken about tariffs, as are certain energy companies, those operating in the midstream, and refiners that might be affected by Canadian oil coming in more expensive,” Blazek said. Still, some domestic industries like steel and aluminum have reportedly welcomed the tariffs.
Banks will also speak up, Blazek said, adding that capital markets softening and a flattening yield curve of ten- and thirty-year bonds is not good news. “I’m sure the higher profile investment banks are going to get more outspoken, too.”
The market reaction is negative, but they have not spiraled yet. Trump’s tariff tactics are uncertain, it looks like a bargaining tool on one hand and economic warfare on the other, but despite the noise there have been little in the way of tangible action so far beyond executive orders and threats.
Even though many think Trump is still crying wolf on tariffs, one source suggested “now it feels like the wolf is actually here.” Sources said that the downturn in equities and the negative economic effects have to get a lot worse before strong views from asset managers will be heard.
