U.S. stocks took their biggest hit of the year, with the country’s largest tech companies getting hit the hardest.
CNBC reported that Microsoft, Apple, Amazon, Alphabet and Facebook — the five most valuable U.S. companies — lost a combined $162 billion on Monday (Aug. 5) following news that as of Sept. 1, the U.S. would impose a 10 percent tariff on $300 billion of Chinese imports.
As a result, U.S. stocks had their worst weekly performance of 2019 and continued falling on Monday after China allowed its currency to fall to its lowest level against the dollar. The five biggest tech companies lost $66 billion in market value on Friday (Aug. 2), and Monday saw the fall go on to reach $228 billion.
Apple had the biggest percentage decline, falling 5.2 percent, as analysts are warning that the proposed tariffs could have a negative impact on the company’s annual earnings.
“Assuming smartphones, tablets, smart watches, and computer systems are not categorically excluded from the final $300B tranche, we expect there will be material impact to Apple hardware product earnings,” wrote analysts from Cowen in a note to clients.
Facebook, Google and Amazon have almost no presence in China, so they didn’t experience the same drop as Apple, but they still fell more than the S&P 500.
The tariffs won’t just cost major companies revenue. The New York Federal Reserve Bank published research in May saying that increased U.S. tariffs on Chinese imports will cost the typical American household $831 a year, with importers possibly switching to goods from more expensive countries.
In addition, several retailers have said that the tariffs will affect their businesses. For example, Walmart Chief Financial Officer Brett Biggs said the increased tariffs will cause prices to rise, and the company will try to make it easier on consumers by attempting to get products from other countries and working with suppliers’ “costs structures to manage higher tariffs.”