Tyler Schipper, associate professor of economics at the University of St. Thomas, joined WCCO Radio host Jason DeRusha to explain a sharp stock market decline tied to renewed uncertainty over tariffs and trade policy. Schipper said the drop was driven less by economic fundamentals and more by geopolitical unpredictability, noting that the administration’s use of tariffs as a broad policy tool has unsettled investors and prompted concerns about the direction and stability of U.S. trade relationships.
From the conversation:
Jason DeRusha: I think the headlines about the economy and the stock market are often treated as the same thing, even though they are not. But when the stock market, and specifically the S&P 500, drops more than 2%, the biggest drop since October, I think it is worth our time and worth exploring.
To get some answers, we turn to economist and associate professor at the University of St Thomas, Dr. Tyler Schipper.
The S&P was down 2% today, and the Dow Jones fell almost 900 points. This is significant, isn’t it?
Tyler Schipper: It is. This is a big drop, especially given what we have seen more recently. It has felt like we have fallen into a pattern where the market has some down days, but not really large drops, largely because we have been on such a strong upswing lately.
DeRusha: We have seen tariff talk and tariff threats, including this situation involving tariffs on French wine and champagne, which I admit is personally relevant to my interests, but probably not large enough on its own to send the market into a tizzy. Is this more about tariffs, or is this about the Greenland situation?
Schipper: I think it is a combination of both, because the tariffs are stemming from the Greenland situation. This change is not about economic or company fundamentals. It is about the return of uncertainty.
Toward the end of last year, a lot of people thought we had seen the worst of tariffs. The thinking was that tariffs would be higher, prices would be more expensive, but that we had moved past that phase. Now, all of a sudden, tariffs are back, and they are back in an unexpected way.
Take the UK as an example. If a country we supposedly have a new deal with can suddenly see tariffs ramped back up, then it raises the question of whether we have made any progress with trade deals at all. That uncertainty is causing people to reevaluate where we stand on tariffs.
DeRusha: As an economist, tariffs are often described as a weapon, used to drive other outcomes. President Trump has used them to pursue deals he could claim as wins. Is this different in your view, when tariffs are being used to achieve a different policy objective? This is not about protecting U.S. jobs or auto manufacturing. This is about pushing back against countries that are not supportive of President Trump’s effort to take over Greenland.
Schipper: Exactly. With the exception of this administration, this is a very unusual way to conduct trade policy. We have seen sanctions used against countries before, but those are generally considered a different category than tariffs.
What makes this different is how broadly tariffs are being used for geopolitical aims. Previous administrations tended to use them more narrowly, such as improving market access for U.S. firms or encouraging other countries to lower their tariffs. This approach is fundamentally different.
*conversation starts at the 15:25 minute mark
