Minnesota company stocks tank amid larger market downturn

Minnesota companies have taken a beating on Wall Street, days after sweeping new tariffs sent global markets tumbling.

Dozens of the state’s largest companies, from Sun Country Airlines to Polaris to U.S. Bancorp, have underperformed the S&P 500 with double-digit declines over the past week.

Though some were already facing headwinds before the trade war began, anxiety over how the escalating economic conflict might unfold has created uncertainty for Minnesotans and the places they work, shop and invest.

“People are just kind of freezing,” said David Royal, chief financial and investment officer at Thrivent. “Consumers don’t want to make big decisions, but neither do companies.”

President Donald Trump signed an executive order Feb. 1 imposing tariffs on goods from China, Canada and Mexico. Things have escalated from there, reaching a fever pitch Wednesday when Trump announced sweeping import taxes on $2.5 trillion of goods.

Investors are eyeing how susceptible companies are to tariff impacts, including what they import and export and potential constraints on consumers, said Adam Hersh, senior economist at the Economic Policy Institute.

Most susceptible are so-called cyclical companies, or those that follow the larger economy. In Minnesota, the market downturn has hit hardest for manufacturing, an already-struggling sector that relies on imported raw materials. Though using tariffs to make imports more expensive is intended to spur domestic manufacturing, shifting global supply chains is a yearslong process.

Minnesota is home to more than 500 medical device companies driving the state’s most valuable export category in 2024. The state’s largest medtech operations, including Medtronic, Boston Scientific, Abbott Laboratories and Solventum suffered stock price decreases ranging from 5% to 14% in the last five days.

AdvaMed, the Washington-based medtech trade group, is increasing pressure on the Trump administration to exempt medical devices from tariffs. Alongside nine other medical trade associations, AdvaMed said Monday it wrote to U.S. Trade Representative Jamieson Greer that the organizations “are concerned that tariffs placed on medical and dental equipment threaten to disrupt the supply chain and raise costs for these critical items.”

Tariffs are impactful for the industry because the medical device supply chain relies on key components from other countries. Boston Scientific said in its annual report that the implementation of further tariffs on imports could negatively affect business. The chief financial officer of Solventum, which has a plant in China, another in Canada and two in Mexico, told investors in February, “like others, we’re obviously concerned and we’re monitoring this very closely.”

In the meantime, companies can either absorb tariff costs or pass them along to consumers, at a time when many are already stretched thin from years of post-COVID inflation. Either way, the result will be lower profits and stock valuations, said Tyler Schipper, associate economics professor at the University of St. Thomas.

“That’s kind of the headwinds that tariffs can cause and why more people are talking about recessions now,” Schipper said. “It’s not just consumers having to do what we have been doing. It’s now also that the firms that were a source of job growth are going to feel those, too, and an already static job market might start seeing more layoffs the longer this goes on.”

Anthony Saglimbene, chief market strategist for Ameriprise Financial in Minneapolis, posted a market note Monday for clients and advisors that said last week’s jobs report from the Bureau of Labor Statistics should have been a positive force on the economy.

The report showed the economy was comparatively sound entering 2025, with many companies forecasting growth and the labor market strong – yet Saglimbene said investors discounted those results, given the tariffs announced last week.

“Investors should prepare for another difficult week if the Trump administration’s narrative on tariffs does not soon begin to recognize the damage being incurred in financial markets,” Saglimbene wrote.

Saglimbene noted declines in the NASDAQ Composite and Russell 2000 have pushed those broad market indicators into bear territory, which is defined as 20% declines from recent peaks.

The two most popular stock indexes, the S&P 500 and Dow Jones Industrial Average, have so far remained out of bear territory.

“Unfortunately, it won’t take much more pain this week to push these broad measures of the U.S. stock market into bear markets at the rate stock prices are currently declining,” Saglimbene wrote.

Economists have widely warned the reaching impacts of tariffs may slow U.S. growth or even bring on a recession. Financial service providers, like big banks relying on consumer spending to drive lending revenues, for example, are sharing some of losses in value on the stock market. Minneapolis-based U.S. Bancorp, the nation’s fifth-largest bank and a super-regional institution, saw its stock price drop more than 12% over a five-day period as trading remained open Monday afternoon.

Tighter wallets may lead to a downturn in travel demand, a discretionary expense businesses and everyday consumers often cut when times get tough.

In the face of diminishing consumer confidence, big airlines — including Delta Air Lines, the No. 1 servicer at Minneapolis-St. Paul International Airport — softened earnings forecasts for the first quarter of 2025 before the Trump administration’s latest tariff plans took shape.

As declining stock prices hit major airlines, budget carriers were not spared, including Minneapolis-based Sun Country Airlines. The leisure carrier, which marginally reduced its outlook last month, witnessed its stock price drop of more than 14% in the past week.

Though losses have been widespread, some Minnesota companies have taken less of a hit.

Food companies, for example, are seen as “defensive” stocks, which investors tend to rely on during economic downturns. Consumers still need food during recessions, and history shows they eat more at home as budgets tighten and the economy worsens. Minnesota-based General Mills and Hormel Foods have not seen their stock prices fall as much as the overall market as a result.

Minnesota’s economy tends to mirror the national economy because of its diversity, which in the long run may protect the state from the worst effects of a downturn.

“I think Minnesota, as states go, is pretty well-positioned,” Royal said.

Brooks Johnson, Bill Lukitsch and Victor Stefanescu of the Minnesota Star Tribune contributed to this story.