S&P webinar: Trump tariffs create market volatility, uncertainty across sectors

➤ Property and casualty insurers are facing higher loss costs as tariffs increase the prices of building materials and auto parts.

➤ Metals and mining sectors have experienced price volatility and demand concerns, with copper prices dropping sharply in response to the tariff announcements.

➤ Regulatory changes are creating a more favorable environment for bank M&A, but market volatility is tempering dealmaking enthusiasm.

Trump administration tariffs have created significant market volatility and uncertainty across multiple sectors, leading to concerns over potential inflationary pressures and supply chain disruptions, panelists said during an S&P Global Market Intelligence webinar discussing the impact of recent policy decisions.

Since coming into office in January, US President Donald Trump has issued a raft of executive orders and imposed wide-ranging tariffs on multiple countries and territories, although some of these have since been paused or modified. However, the uncertainty these decisions caused has put pressure on global markets and economies.

"From a market perspective, the gains in the aftermath of election day and inauguration day, as evidenced by rising stocks, have given way to declines as investors digest the potential impacts of tariffs and other policy uncertainty. Major stock indexes are down from just a few months ago, with most of the volatility occurring earlier this month following the announcement and the subsequent pause of US tariffs applied to all global imports, with specific amounts varying by country," Sean Longoria, editorial lead for central insights at Market Intelligence, said during the April 30 "Analyzing the Material Impacts of Recent Policy Developments" webinar.

Impact on insurers

The insurance industry faces several challenges from tariffs, particularly in property and casualty (P&C) lines, Hailey Ross, Market Intelligence insurance reporter, said. For homeowners insurance, increased costs of construction materials will likely lead to higher premiums. Auto insurance faces similar pressures, with around 60% of auto replacement parts used in US repairs being imported from China and Mexico, both of which are impacted.

"Tariffs are inherently inflationary, which means they can drive up the cost of materials. ... When that happens, insurers have to deal with higher loss costs when it comes to repairs and restorations. And then homeowners insurers will have to raise premiums to keep up with the rising costs. The same thing kind of goes for auto insurance," Ross said.

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The full scale and timing of the tariffs' effects remain uncertain.

"Some P&C insurers, during first-quarter earnings [announcements], indicated that tariffs are not that big of a deal," Ross said. "What I'm hearing from analysts is ... that they believe P&C insurers should be able to navigate the tariffs and that things do seem manageable for now. However, in general, there's just a lot of uncertainty."

Volatility across the board

Tariffs have created significant price volatility in the metals and mining sector, said Mark Ferguson, director in the Metals and Mining Research Group at S&P Global Commodity Insights. Copper — seen as a "bellwether for the state of the global economy" — was particularly affected, with prices dropping sharply in February and March "in response to a lot of the tariff announcements that happened at the beginning of April."

"That was a reflection of fears across the board that the extensive tariffs that were being implemented would dramatically harm global GDP and consumer demand, not just in the US but around the world," Ferguson said.

The tech industry is also grappling with tariff impacts, particularly in the semiconductor and AI sectors.

Stephan Modrich, a technology policy reporter at Market Intelligence, said attempts to diversify supply chains in the space, specifically since the COVID-19 pandemic, have been slow due to constraints in how quickly tech manufacturing can shift. Even with programs to incentivize semiconductor production in the US, for example, more than 90% of manufacturing remains in Taiwan, with emerging hubs in Vietnam and India — all of which were affected by tariff increases.

The uncertainty around tariff policies has broader economic implications.

Ferguson said tariffs are "simply a net negative for GDP," citing analysis from S&P Global Ratings economists. Manufacturing purchasing manager index readings have been subdued, with the US seeing a sharper pullback reflecting tariff concerns.

Policy decision impacts for banks

Beyond tariffs, Trump administration policy changes around attempts to "remove roadblocks from M&A" by reducing regulatory burdens on banks have shown promise. This has seen an increase in de novo bank applications since the beginning of the year, for example, as well as the average number of days for bank M&A deals over $500 million to close coming down to their lowest levels in nearly five years.

"Deals that have been completed this year closed, on average, in 223.5 days. This is the fastest we've seen since 2021, when the median days was 188 days," said Zoe Sagalow, a bank regulation reporter at Market Intelligence.

Despite the more favorable regulatory environment, bank M&A optimism has cooled since the beginning of the year.

"Once the tariff turmoil entered the marketplace, that put, kind of, a chilling effect on bank M&A. Even so, we've seen a few deals announced very recently, such as a couple of larger transactions even being announced in the last week. ... So we'll see if that's a sign of things to come," Sagalow said.

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This content may be AI-assisted, and is composed, reviewed, edited and approved by a human at S&P Global.