S&P to Decline Sharply Due to Tariffs

The S&P 500 has essentially traded sideways in 2026, but history says the benchmark index could decline sharply in the coming months.

Actress Sydney Sweeney recently visited the New York Stock Exchange for the bell ringing of American Eagle, a brand that she endorses. (Photo: New York Stock Exchange Facebook)

Several recent studies show President Trump’s tariffs are siphoning money away from U.S. companies and consumers, and the S&P 500 just flashed a warning last seen during the dot-com crash in October 2000, Trevor Jennewine reported for Motley Fool.

Trump has argued that exporters will pay his tariffs for the privilege of doing business in the U.S. He made the claim in an editorial published by The Wall Street Journal, saying foreign companies were “paying at least 80% of tariff costs,” and linked a study from Harvard Business School to support it.

The study Trump cited made no such claim and arrived at the opposite conclusion.

“Our results suggest that U.S. consumers paid up to 43% of the tariff burden, with the rest absorbed by U.S. firms,” it said. Those results hew closely to studies by other groups.

Goldman Sachs economists said U.S. companies and consumers paid 84% of tariffs in October 2025. They said consumers alone will bear 67% of the burden by July 2026.

Similarly, the Kiel Institute examined shipments totaling $4 trillion between January 2024 and November 2025, and the researchers concluded, “Foreign exporters absorb only about 4% of the tariff burden.”

The other 96% is passed along to U.S. importers and consumers. Trump’s tariffs are effectively a tax on consumption, which means they reduce buying power for consumers and raise input costs for businesses.

That’s a problem because consumer spending and business investment account for approximately 85% of GDP. By siphoning money away from consumers and businesses, tariffs threaten to slow economic growth.