Consumer confidence soared to an 18-year high in February, on the tailwinds of the passage of the most sweeping tax rewrite in over 30 years at the end of 2017. But now, with U.S. President Donald Trump’s ramp up of protectionist rhetoric and heightened concerns of a global trade war, the optimism has begun to diminish. The Conference Board Consumer Confidence Index declined to 127.7 in March, from the high of 130.0 in February, with many pointing to President Trump’s tariffs as playing a major role for the drop off. [i] Companies have already started to examine the potential impact to their supply chains and are reevaluating the way they conduct business. Although the implementation details of the President’s tariffs have yet to be provided, we went ahead and evaluated the levies’ potential market implications.
U.S. tariff announcements have occurred 31 times in the last 35 years, according to an S&P Global Market Intelligence analysis using Kensho, provider of next-generation analytics and data visualization systems, which was recently acquired by S&P Global. On a rolling quarterly basis, following the announcement, the S&P 500 increased, on average, by 2.79%, trading positively more than 78% of the time. Energy stocks tended to be the bottom performing among the S&P 500 sectors, while S&P 500 Information Technology and S&P 500 Consumer Discretionary companies posted slight positive returns for the quarter.