The trade tension and the tariff war started by Trump has unleashed chaos in stock markets around the world, and stock indexes have recorded historic drops not seen in many years. It has only been two weeks since Trump announced he would impose tariffs on almost every country in the world to, according to him, boost American trade. But nothing to do with that. Other powers like Europe and China have responded as expected, the first warning that on April 9 some tariffs will also come into effect, and the second saying it will match the 34% tariffs if they are not removed or if no agreement is reached. The movie is reversed. In the middle of this chaos that doesn’t seem like it will improve soon, Elon Musk hasn’t been able to keep quiet (surprise!) and has challenged the president so that his empire doesn’t fall. We’ll tell you everything below.
Chaos in the stock market
We’re not talking about chaos like in 1929, at least not yet, but last Friday both China, the United States and Spain saw huge crashes, and this hidden trade war has some major losers. Apple, Nvidia, Microsoft, Adidas, Nike, or LVMH lost between 10% and 20% of their value in less than a week. But not only them, the Spanish, Chinese, and Japanese stock exchanges also experienced a major collapse in their values.
Which sector has been the most affected?
Clearly, the automotive sector has suffered the most from these tariffs, because parts used to produce within their borders are taxed at 25%, such as steel and aluminium, and of course, now they cost more money.
On the other hand, Mexico and Canada halted their shipments, and companies like Honda, Toyota, Stellantis, or BMW have dropped 10%, 15%, or 20%, respectively.
Why has Musk turned against it?
In practice, a company like Tesla should come out stronger because it manufactures all its products on U.S. soil and that’s rare, but this chaos has caused them million-dollar losses. Now you understand why Musk was the one to challenge the president, right?
So what’s affecting Tesla?
Everything around Tesla seems to be shaking, bad numbers in the first quarter, its credibility going down faster than the market itself, rumours of a possible exit, and the risk that China could limit its technology, forcing it to partner with Baidu, a Chinese company it would work with in terms of advanced driving.
On the other hand, Tesla’s stock drop has been catastrophic, nearly 15% (from $280 to $239).
Has Elon Musk broken with Donald Trump?
Musk’s statements seem totally against Trump’s measure, as he believes the mogul had called to move toward “zero tariffs” between Europe and the United States, and of course, this shows a distancing between the two, who until now had shared nationalist speeches and similar support for far-right political parties. But the pressure from investors, the stock market crash, the fear of a recession… maybe Musk is seeing the warning signs and being more careful where he steps.
What will happen now?
Now uncertainty weighs on all levels of society, and of course, Musk’s statements also have a major geopolitical impact. His request is clear: free trade between the United States and Europe. What could this mean? A before and after in global economic policy. But in the meantime, and while Trump does not reconsider his words, the markets remain in the red and the atmosphere seems to be heating up even more… Everything looks a little bit chaotic and strange… It’s not just Tesla’s future at stake, but the global economy.