I Compared Stock Prices Before and After Trump’s Tariffs: Here’s What Changed

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Over the course of both terms of President Donald Trump’s administration, tariffs have triggered volatile stock market selloffs.

However, tariffs have not resulted in consistent long-term declines and prices ultimately recovered. Here’s what the historical record shows.

Immediate Volatility Spikes

Science Direct undertook a comprehensive analysis of how stock prices of 1,194 U.S. companies reacted to 4,624 tariff-related announcements between 2018 and 2019, during Trump’s first term. The researchers found that negative abnormal stock returns followed tariff news, suggesting investors viewed initial announcements as a risk to corporate profits and global trade. 

This trend continued into Trump’s second presidential term as well. Leading into April 2026, for example, the S&P 500 fell sharply after new tariff announcements (per PBS), nearly reaching bear market levels, as investors reacted to the possibility of escalating trade conflicts.

Markets Often Recover Over the Long Term

Over the long run, the S&P 500 has always gone on to make new highs, regardless of whatever temporary shock dragged it down. The same is true when it comes to Trump’s tariffs.

During the first Trump Administration, for example, the S&P 500 delivered an 81.3% total return, according to data from U.S. Bank. This strong overall equity performance shows that tariffs did not interfere with the market’s long-term trend higher. 

Why Tariffs Affect Stocks

A tariff is essentially a tax on importers, who must decide whether to absorb the increased cost or pass it along to consumers. Either way, costs for companies increase, potentially lowering profits. As earnings are the ultimate driver of stock prices, if tariffs lower profits, stock prices can follow.

S&P 500 earnings per share fall by roughly 1% to 2% for every 5% increase in U.S. tariff rates, according to research from Goldman Sachs. This illustrates how trade policy can have a direct effect on corporate profitability. 

The exact effects tariffs have on the economy as a whole can be hard to pin down. This uncertainty can lead to increased stock market volatility, according to J.P. Morgan, as investors prefer to have a clearer outlook in terms of corporate profitability.

Sector Winners and Losers

Tariff exposure doesn’t affect all companies in the same way, according to the Science Digest data. Businesses that depend on global trade, particularly imported or exported components, tend to experience larger price declines following tariff announcements.

Conversely, domestic-focused companies can actually benefit, if tariffs reduce foreign competition. But that effect can be diminished if foreign countries enact retaliatory tariffs. 

Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.

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