US tariffs and the stock market: what a tariff shock does to stocks, sector by sector
Under review: something we watch has changed (aUTHORITY RULING). The figures stand until the review is done.
What is happening
In April 2025 the United States put large new taxes on goods from almost every country. Share prices fell fast. Most of those tariffs have since been struck down or replaced with lower ones, but they could come back.
Tariffs make imported goods dearer. Yale Budget Lab estimates today's tariffs add about 0.7% to prices in the shops, about $1,100 a household a year.
Three ways it could go
Calm case · Relief
Tariffs come down: the courts strike down the current rates or a deal cuts them. We do not size this case: the relief we measured (the May 2025 Geneva truce, the February 2026 ruling) moved shares in ways no rule we tested could predict.
We put the chance of this at about 1 in 5 (unlikely).
Middle case · Current Law
Things stay as they are: an average tariff of about 11%, which Yale Budget Lab estimates adds about 0.7% to prices in the shops. Shares already reflect this, so we show no further move.
We put the chance of this at about 6 in 10 (likely).
Severe case · Re-escalation
Big new tariffs on most countries at once, like April 2025. We show what each kind of share actually did in the four trading days after that announcement: U.S. shares fell 12%, and energy, airline and chip shares fell the most. The next day most of those tariffs were paused and shares won back most of the fall, so this is the case where no pause comes. It is one real week replayed, not a prediction of the size.
We put the chance of this at about 1 in 5 (unlikely).
Which sectors are exposed
In the case we rate most likely (Current Law), the model shows no further move for any sector.
| Sector | Calm caseRelief | Middle caseCurrent Law | Severe caseRe-escalation |
|---|---|---|---|
| Energy producers | — | 0.0% | ▼ −20.3% |
| Airlines | — | 0.0% | ▼ −18.5% |
| LNG | — | 0.0% | ▼ −16.7% |
| Semiconductors | — | 0.0% | ▼ −16.0% |
| Autos | — | 0.0% | ▼ −14.7% |
| Big tech | — | 0.0% | ▼ −14.6% |
| Financials | — | 0.0% | ▼ −14.2% |
| Tankers | — | 0.0% | ▼ −12.8% |
| Luxury | — | 0.0% | ▼ −12.0% |
| Agriculture & food | — | 0.0% | ▼ −11.9% |
| EM equities | — | 0.0% | ▼ −11.6% |
| Reconstruction | — | 0.0% | ▼ −10.9% |
| Broad market | — | 0.0% | ▼ −9.7% |
| Gold | — | 0.0% | ▼ −9.6% |
| Gulf producers | — | 0.0% | ▼ −8.1% |
| Defence | — | 0.0% | ▼ −7.5% |
| Utilities | — | 0.0% | ▼ −5.9% |
| EM bonds | — | 0.0% | ▼ −3.2% |
Relief: no figure. We do not size relief: the relief we measured (the May 2025 truce, the February 2026 ruling) moved shares in ways no rule we tested could predict.
Measured from one real event: the re-escalation case replays what shares did in the week after April 2025's tariffs, as they moved then. Not scaled to any other size.
How sure are we?
Partly. The bad case is what shares actually did in the week after the April 2025 tariffs, replayed and never scaled: markets react to whether tariff news is good or bad, not to its size. The good case is not sized. We file the move under slower growth; how it splits was not measured.
What to watch next
- A broad new U.S. tariff on most trading partners at once
- Changes to the Section 301 rates or a new Section 232 action
- Court rulings or Congressional action on tariff powers
Your own holdings
The table shows sectors. To see how this crisis reaches the shares you hold, add them in the Workspace: free, no sign-in needed.
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DELAX describes exposure. It is not investment advice.