Why Micron Technologies Stock Was Flopping on Friday

Key Points

• New tariffs are coming! Maybe.

• President Trump has pledged to impose fresh levies on the chip and steel industries.

• 10 stocks we like better than Micron Technology ›

The latest pronouncement from President Trump on tariffs for microchips had investors concerned about chipmakers on Friday. One of the victims was a sector mainstay, Micron Technologies (NASDAQ: MU), whose share price closed more than 3% down that day. That was a far steeper fall than the 0.3% dip posted by the S&P 500 (SNPINDEX: ^GSPC) at that point.

New Trump tariffs on chips?

Before market open that day, Trump was quoted by news agency Reuters as saying, "I'll be setting tariffs next week and the week after on steel and on, I would say, chips." He made this remark aboard Air Force One, on the way to Alaska for his summit meeting on the Ukraine war with Russian President Vladimir Putin.

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Image source: Getty Images.

Trump added that the tariffs would be relatively low at the outset, in order to give chip companies time to build out their manufacturing in this country. After such a grace period, the rates would rise dramatically. The president, however, did not provide any exact percentages of these tariffs.

Even U.S.-based companies like Micron often rely at least partially on Asian factories to produce their wares. Micron has manufacturing facilities not only in its native state of Idaho and in Virginia, but in locales across the Pacific Ocean such as Malaysia, Singapore, Japan, and Taiwan. As such, it and numerous peers will be directly affected by Trump's promised new tariffs.

Hold steady

Micron hasn't yet commented on the president's apparent plan. Of course, there won't be any direct effect until -- and, importantly, if -- the U.S. leader pulls the lever on them. He has shown to be somewhat erratic about this, so no investor should trade in or out of the stock (or that of any other domestic chip company) until they're firmly established.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.