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GERMANY - 2025/04/06: In this photo illustration, Meta Platforms Inc. logo is seen displayed on a ... More monitor. (Photo Illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Images)
SOPA Images/LightRocket via Getty Images
President Donald Trump’s recent announcement of sweeping tariffs on goods from over 100 countries has raised anxieties about its potential toll on the broader U.S. economy and consumer spending. The situation is further complicated by China’s reciprocal tariffs, which are higher than anticipated and are escalating the ongoing trade war. Consequently, the the global markets are seeing a significant downturn today. The Hang Seng index is down 13%, the Nikkei down 8%, and European markets are also trading in negative territory.
Following a 10% decline in the past week, Meta’s (NASDAQ:META) stock continues to trend lower, reflecting broader market concerns. These concerns are amplified by the potential impact of upcoming tariffs on Meta. As selling products to the U.S. becomes more expensive due to tariffs, brands are likely to cut back on their marketing budgets, directly affecting Meta’s advertising revenue.
Meta’s stock is not immune to economic downturns and it could face substantial losses. Evidence from 2022 shows that Meta’s stock value decreased by over 75% within a few quarters. This begs the question: If a downturn similar to the one we saw in 2022 were to materialize, could META stock, which was around $740 in February, potentially plummet to below $200? Now, of course, individual stocks are more volatile than a portfolio — and in this environment, if you seek upside with less volatility than a single stock, consider the High-Quality portfolio, which has outperformed the S&P 500 and achieved returns greater than 91% since inception.
Why Is It Relevant Now?
Given the current economic landscape, the earlier concerns regarding the potential impact of tariffs on Meta are now particularly pertinent. The recently announced sweeping tariffs, coupled with the increasing likelihood of a widespread trade war involving key global partners, could significantly strain Meta’s business as advertisers potentially reduce their spending. This is especially relevant considering China’s substantial contribution to Meta's revenue, generating approximately $18 billion, or 11% of its total (including revenue from ads shown outside the U.S. but attributable to Chinese entities). Furthermore, President Trump's recent aggressive trade policies have reignited fears of inflation, which could further diminish consumer spending power and negatively affect companies like Meta. All of this means the U.S. economy could hit a rough spot, and even worse, hit a recession — our analysis here on the macro picture.
Given the elevated geopolitical uncertainty, partly fueled by potential policy shifts from the new Trump administration, several critical risks warrant attention. The ongoing war in Ukraine continues to contribute to global instability, and the landscape of international trade remains uncertain. Specifically, the implementation of tariffs can lead to increased import costs, which often translate into higher prices for consumers, reduced disposable income, and ultimately, weaker consumer spending.
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