Noisy, tariff-obsessed week was market’s worst of the year

The S&P 500 suffered its worst weekly loss so far this year amid seemingly nonstop chatter about President Trump’s on-again, off-again plans to slap massive tariffs on America’s largest two trading partners, Canada and Mexico.

The S&P 500’s 3.1% weekly drop was accompanied by growing worries about an economic slowdown, a dynamic that analysts attribute to the White House’s chaotic approach to establishing economic policy. This week’s tariff saga, and the toll it seemed to take on markets, was an example.

On Monday, the president declared flatly that there was “no room left” to avoid the duties on America’s neighbors, tanking a jittery market that’s increasingly concerned about sharp downturns in sentiment from consumers and corporate leaders.

The next day, after another ugly stock market drop, Secretary of Commerce Howard Lutnick said that maybe, you know, something could be “worked out,” but certainly not another short-term delay. (“It’s not going to be a pause — none of that pause stuff,” Lutnick told Fox News.)

On Wednesday, the administration confirmed that automakers — whose integrated production systems sprawl over both the the northern and southern borders — would be exempt from the tariffs, giving the markets a bit of hope.

But stocks reeled again on Thursday, showing signs of both whiplash from the tariff debate and broader concerns about the AI trade that’s fueled the bull market rally until stocks began to sputter in mid-February. The administration’s announcement that, upon further reflection, it actually will delay the tariffs that had dominated the week’s trading seemed to be met with an exhausted shrug by the markets.

On Friday, following a slightly underwhelming report on the American job market, stocks wobbled toward the weekend like an exhausted prize fighter trying to make it to the end of a round, and after falling by more than 1%, the S&P rallied to a positive close, helped in part by a relatively upbeat economic assessment of the economy by Federal Reserve Chairman Jerome Powell.

So where do things stand? Well, the tariffs on Canada and Mexico seem to be set to the side for a few weeks. (Though the fact that it’s still not resolved won’t be doing much to shore either corporate or consumer confidence.)

It must also be said that while tariffs took up a lot of the oxygen in the national conversation, the iShares MSCI USA Momentum Factor ETF, which is largely loaded up on AI-linked companies not that impacted by tariffs, had its worst week since 2022 and fell about twice as much as the market.

It’s not over for tariff talk as Trump’s tariffs — yes, more tariffs! — on steel and aluminum are set to go into effect on Wednesday, just as fresh CPI inflation data hits that morning.

Also next week, expect increasingly frantic activity from Congress as it tries to meet a Friday deadline to fund or partially shut down the government. Good times!