Stocks Take Another Tariff to the Shin
Market Report for Friday, May 23, 2025
Stocks Take Another Tariff to the Shin
Markets sagged again Friday after a fresh round of tariff threats landed like a sandbag, flattening retailers still wheezing from the last batch. Stocks clawed back from session lows but still logged a 2% weekly drop. This trade war is the market’s Newtonian nemesis—what goes up meets tariffs and comes down.
Level Change 5/23/25 (%)
– – – – – – – – – – – – – – –
-0.6 Dow
-1.0 Nasdaq
-0.9 Nasdaq 100
-0.7 S&P 500
-0.2 S&P 400
-0.6 S&P 600
Trade returned to the front burner—and promptly boiled over. President Trump declared that talks with the EU are “going nowhere” and vowed a “straight 50% tariff” on all EU goods starting June 1. That’s more than twice the 20% bluff, quintuple the 10% goodwill pause, and roughly par for the posturing.
This followed reports that the US would reject the EU’s latest offer on a call with Trade Rep Jamieson Greer. Treasury Secretary Scott Bessent, reprising his role as tariff translator, said countries must “negotiate in good faith or face the US simply setting a tariff rate.” It’s trade policy by way of “clean your room or I’ll do it for you.”
The EU didn’t flinch. Trade Commissioner Maroš Šefčovič insisted that “mutual respect, not threats,” should guide policy, and pledged to defend EU interests. Analysts pointed out the White House vow wasn’t an executive order (yet) and called it a classic Trump tactic: threaten big, negotiate later.
Apple (AAPL -3%) took its turn in the barrel after Trump warned that iPhones must be made in the US or face a 25% tariff—“at least.” Precision vagueness aside, Wedbush dismissed the idea as “a fairy tale.” Tripling the iPhone’s price just to stamp “Made in America” on the back might rupture even Cupertino’s famed reality-distortion field.
Of course, there’s a reason iPhones aren’t made in America. Apple spent billions training engineers abroad, where China and India offer deeper talent pools at a fraction of US wages. Steve Jobs put it bluntly to President Obama in 2010: Apple needed 30,000 industrial engineers. “You can’t find that many in America to hire,” he said. “If you could educate these engineers, we could move more manufacturing plants here.”
Fifteen years later, the gap remains, and Trump’s tariff-driven wish won’t close it overnight. Attention spans matter, especially when paired with a long-term plan. Just ask China.
Retailers didn’t wait for tariffs to wreck margins—they jumped first. Ross Stores (ROST -9.9%) tanked after yanking its full-year outlook, blaming “evolving trade policies” and stubborn inflation. Deckers Outdoor (DECK -19.9%) fell even harder, warning of weakened demand and tariff tolls on its Hoka and Ugg brands. When shoes drop this hard, they leave a crater.
The Fed hasn’t exactly broken into song either.
Chicago’s Austan Goolsbee said the economy is holding up for now but warned that tariff-driven stagflation is “the central bank’s worst situation.” He’s still hopeful the US can return to the solid growth it enjoyed before the April 2 “Liberation Day” shock and suggested interest rates might be “a fair bit below where they are today” in 10 to 16 months. With luck, that’s enough time for the baby parade to march out of earshot.
And that was Friday: fresh tariff threats, falling shoes, and a president confident that wishful thinking can outpace engineering shortages.
Kelly Letter subscribers, I’ll see you Sunday. Bring coffee—we’ve got tariffs to untangle.
— Jason Kelly