Trekking Through Tariffs  

Here is a question that all investors would like to know: What comes next? It is no secret that the market volatility observed over the past three weeks has been some of the most extreme in recent memory. There is no knowing what the next day, hour, or even minute could bring to the market. The announcement of the United States enacting import tariffs on countries worldwide led to the worst day for the US stock market since COVID. Then a few days later a 90-day pause on the tariffs caused one of the best-performing days in recent history. In between the two events was a false report that saw the market spike up and back down all within an hour. With such volatility in the span of only a few days, investors across the world are on their toes to see whether the next batch of tariff news will have them seeing red or green. 

The Magnificent Seven has been hit particularly hard over the past couple weeks. Comprised of AMZN, AAPL, GOOG, META, MSFT, NVDA, and TSLA, the companies that were seeing record highs earlier in the year are now losing significant chunks of their market cap. On April 3^rd alone, the Mag Seven stocks lost over $1 trillion in market cap. These tech stocks are in everyone’s portfolios, from hedge funds to retirement accounts, and shareholders have been feeling the losses. 

Of the seven stocks, Tesla’s shareholders (NASDAQ:TSLA) has been hurting the most. After closing at an all-time high of $472.10 on 12/16/2024, the stock dropped 53% to $218.75 on 4/8/2025. A trader who sold short 100 shares of TSLA spanning that period could have profited $25,335 (not including commissions or borrow fees). The borrow rate for TSLA has recently varied between 0.25% and 0.41%, but assuming you had an annualized rate of 0.25% during this roughly four-month stretch, the short sale cost would be about $0.32 a day. Paying this fee over a 120-day period would cost a short holder $38.40, a relatively small amount considering its volatility, and a potential profit of $25,000 over the same stretch. IBKR currently offers an annualized short credit interest rate of 4.08% for short balances of over $3 million. Assuming a trader shorted $5 million worth of TSLA and this was their only position, using our blended rate they would receive roughly $509 a day from the short sale proceeds. 

TSLA Short History (3/13/2025-4/11/2025) 

Apple Inc. (NASDAQ:AAPL) is another company caught in the tariff crosshairs. After President Trump’s announcement to add tariffs of over 100% to Chinese imports, AAPL shares took a plunge. Despite recent efforts to spread manufacturing plants to other parts of the globe, AAPL produces the majority of their products in China. Trading at $223.83 prior to the tariff announcements on April 2^nd, the stock would drop 21.7% to $175.30 at its low point. There has been recent news that the Trump Administration is considering the exemption of certain imports from China, causing AAPL shares to jump on 4/14. 

AAPL Short History (3/13/2025-4/11/2025) 

Source: Interactive Brokers Securities Lending Dashboard. Data is provided by Orbisa.      

As more news continues to roll out on tariffs, traders might expect there to be several additional ups and downs. Investors with a short-term horizon will likely be more interested in the day-to-day movements of the market as these swings will have greater consequences on their portfolio. On the contrary, those with a long-term horizon are less likely to be concerned with the daily volatility and view these events as standard market movements. IBKR is able to support investors from each category and will continue to enhance our short inventory to give traders the option to sell short.