U.S. companies were hammered again in the stock market Friday after China matched President Donald Trump’s tariffs in what is a rapidly escalating trade war.
Few sectors were spared and the S&P 500 finished with its biggest one-day drop since COVID-19 flattened the global economy five years ago.
The Commerce Ministry in Beijing said it would respond to the 34% tariffs imposed by the U.S. on imports from China by imposing a 34% tariff on imports of all U.S. products beginning April 10.
Companies who sell their goods to China were hit hard on Friday, including those in aerospace, agriculture and heavy equipment.
Some of Thursday’s biggest losers — banks, airlines and technology companies — sank again on Friday. Others, such as retailers, clothing and restaurants, were down but not nearly as bad. A handful, like Nike, even posted small gains on Friday.
The so-called Magnificent 7 stocks that have dominated the market the past few years had some of the heaviest losses. Apple, Microsoft, Nvidia, Alphabet, Amazon, Meta and Tesla lost around $1.8 trillion in market value combined in the past two days.
Tariffs are effectively a business tax that gets passed on to consumers. If prices for goods and services rise, consumers could tighten their budgets and pull back on spending for non-essential goods and services.
Consumer spending makes up about 70% of economic activity in the U.S. A significant decline in demand would cause businesses to produce fewer goods, limiting growth and potentially causing a recession.
JPMorgan raised its forecast for the risk of a recession to 60% on Thursday, up from a previous 40%.
The three major U.S. stock indexes fell more than 5% on Friday.
Here’s a breakdown of some of the market’s worst performing sectors and companies on Friday.
Agriculture and heavy equipment
Some of the U.S.’s biggest exports to China are heavy machinery and oilseeds and grains.
Deere & Co., down 3.9% Friday after losing 5% on Thursday.
Archer-Daniels-Midland, down 8.9% Friday after losing 0.8% on Thursday.
Caterpillar, down 5.8% Friday after losing 8.6% on Thursday.
Aerospace and defense
Aerospace companies also heavily export their products to China. As part of its retaliation Friday, China imposed more export controls on rare earths, which includes materials used in high-tech products and aerospace manufacturing and the defense sector.
Boeing, down 9.5% Friday after losing 10.5% on Thursday.
General Dynamics, down 7.3% Friday after losing 2.3% on Thursday.
Airlines
Airlines had been projecting a strong year for profits. However, if Americans are faced with higher prices for essentials, economists say that could put a crimp in their travel budgets.
