Tech stocks are down 7% since Trump’s inauguration as trade war fuels uncertainty

Since President Trump's inauguration in January 2017, the technology sector has experienced significant fluctuations, culminating in a 7% decline as of March 2025. This downturn is largely attributed to the ongoing trade war, which has introduced substantial uncertainty into the market.

Initial Surge in Tech Stocks

In the early years of Trump's presidency, tech stocks saw remarkable growth. Factors such as tax cuts and reduced corporate regulations contributed to this surge. Notably, California-based tech companies within the S&P 500 experienced an average increase of 108% since the inauguration.

Escalation of the Trade War

However, the landscape began to shift as trade tensions between the U.S. and China escalated. Starting in 2018, the U.S. imposed tariffs ranging from 10% to 50% on over $300 billion worth of Chinese imports, prompting China to retaliate with its own tariffs. These measures disrupted global supply chains and heightened economic uncertainty.

Impact on the Technology Sector

The technology sector, heavily reliant on global supply chains and international markets, was particularly vulnerable to these trade disputes. Companies like Nvidia faced significant stock declines, with Nvidia's stock dropping 8.7% in a single day, erasing six months of gains. This decline was part of a broader selloff in AI-related stocks, reflecting investor apprehension about the sector's future amidst geopolitical tensions.

Market Volatility and Economic Indicators

The trade war's impact extended beyond individual companies to the broader market. The S&P 500 experienced increased volatility, with significant drops following tariff announcements. Analysts warned that the trade war could impart a stagflationary impulse to the economy, boosting inflation and interest rates while dragging on growth and profits.

Current Outlook

As of March 2025, the cumulative effects of prolonged trade tensions have led to a 7% decline in tech stocks since Trump's inauguration. While the sector initially benefited from favorable domestic policies, the ensuing trade war introduced challenges that have tempered investor optimism. The technology industry's future performance will likely hinge on the resolution of these trade disputes and the restoration of stable international trade relations.