Charles Schwab (SCHW) saw its stock plummet 5.65% in pre-market trading on Thursday, as U.S. asset managers face a sharp sell-off following President Donald Trump's announcement of new tariffs. The move has sparked concerns about potential impacts on the financial sector and asset management industry.

Trump stated on Wednesday that he would impose a 10% baseline tariff on all imports to the U.S. and higher reciprocal duties on some of the country's biggest trading partners, including China. This unexpected policy shift has raised fears of an escalating trade war and its potential negative effects on economic growth and market stability.

The news has hit asset managers particularly hard, with several firms seeing significant pre-market declines. Apollo was down 6.4%, Blackstone fell 4.5%, and BlackRock dropped 4.3%. Charles Schwab's 5.65% decline is in line with this broader trend in the financial sector.

Analysts suggest that asset managers could face a drop in fees, which are often tied to the value of assets under management, if trade war fears, economic uncertainty, and inflationary pressures from tariffs cause an elongated downturn in the markets. Bank of America analysts noted, "After a strong finish to 2024, the escalating trade war and federal spending cuts have increased the risk of stagflation." This economic scenario could potentially impact Charles Schwab's business model and profitability.

Despite the current downturn, it's worth noting that some analysts maintain a positive long-term outlook on Charles Schwab. Raymond James recently raised its target price for the company to $90 from $88, indicating confidence in the firm's fundamental strength despite short-term market pressures.