Why Meta's Stock Tanked After Trump's Trade Move

The answer is easy: it's about ads. Chinese companies pour money into Facebook and Instagram ads, making up 10% of Meta's revenue last year. Giants like Shein and Temu led the charge, with Temu spending $3 billion on marketing in 2023 alone.

Trump's new tariffs threaten this cash flow. By scrapping the $800 duty exemption and raising tariffs on Chinese goods, he's made it harder for Chinese companies to sell cheap products to Americans. When these sellers struggle, their ad spending on Meta's platforms will likely drop.

Meta's CFO tried to calm investors by pointing out that most Chinese ad revenue comes from smaller advertisers. But that strategy backfired. As analyst Eric Seufert tells Isaac: "They don't just have to worry about Temu or Shein dropping off. They have to worry about everyone."

Why this matters:

• Meta doesn't make hardware, but it depends on hardware sellers' ad money
• Spreading risk across many Chinese advertisers made Meta more vulnerable when tariffs hit them all

Read on, my dear:

• New York Times: Why Trump’s Tariffs Are Rattling Even Meta20250404