Trump's Tariff Shock Is Eviscerating Wall Street | Image Source: www.vox.com
NEW YORK, 7 April 2025 – The bloodbath of the stock market that develops under President Donald Trump’s second mandate is no longer a slow movement – it is a collapse. In just a few months of taking possession, the repented markets were thrown into chaos. The culprit? A fierce resurgence of protectionist trade policies enveloped under the sign of Liberation Day. While Trump promises economic independence, investors, retirees and economists look at what can be one of the biggest market revolutions in presidential history.
According to CNN, S plagaamp; P 500 has dropped by 15% since the opening day. It is not yet a complete market for the blood bear, defined as a 20% drop in the last heights, but it is close. The Nasdaq and Russell 2000, however, have already entered bear territory, marking their first fall since 2022. These losses are amazing, especially since Trump inherited a booming market. In 2024, the Slamp; P 500 earned 23% in good health, giving it a solid economic trampoline. However, instead of taking advantage of this dynamic, the aggressive tariff campaign of its administration seems to separate the line of life that connects Wall Street with global confidence, growth and stability.
What brought down the deal?
The downward spiral did not begin in a vacuum. It began with Trump’s “Day of Liberation”, a wave of economic shock disguised as a political cry. As Yardeni Research indicated, nearly two thirds of the 15% market loss occurred after the occurrence. Trump’s assertion that he would impose new large-scale tariffs – some reaching 50% – on foreign imports begged investors. The negligent business community has begun to flee actions.
“The day of liberation was followed by days of destruction on the stock market”
wrote Ed Yardeni, underscoring the sheer violence of the market’s reaction. Unlike previous financial meltdowns driven by global shocks or structural issues—think the 2008 mortgage crisis or the COVID crash—this one has a more political, intentional fingerprint.
The comparison with previous presidential terms further illustrates gravity. The only similar decline from this beginning to one term was in George W. Bush’s first year, when the point-com bubble had already burst before taking over. Trump, on the other hand, entered the middle of a historic bullfighting. This makes it less important this autumn on inherited economic conditions and more on political mistakes.
How are the rates that consume economic anxiety?
The tariffs, on their basis, are import taxes. When Trump reintroduced reduced tariffs in 2025, he did indeed create a supply shock in the US economy. It is not just a Wall Street phenomenon – it affects all the corridors of American life. According to David Kotok of Cumberland Advisors, the situation echoes the 1973-74 oil shock, where inflation collapsed as economic growth stagnated. It’s a dark economic cocktail called stagnation.
Trump’s tariffs are a massive tax increase imposed as a sales tax on American consumers
Kotok warned. That warning is no longer theoretical. Prices have surged on everything from electronics to household staples. Businesses, squeezed by the rising cost of imported materials, are responding predictably—cutting staff and passing costs onto consumers.
The result is a broader macroeconomic contraction. JPMorgan now puts the probability of a recession at 60%, compared to 40%. Goldman Sachs also increased its chances from 20% to 45%, according to Vox. These are not knee shark predictions. They are based on real indicators: lower GDP forecasts, lower consumer spending and higher unemployment risks.
Who’s the hardest?
The common hypothesis is that stock market volatility only affects the ultimate profit. And it is true that the richest 10% of Americans own 93% of the stock exchange wealth, for 2023 data from the Federal Reserve. But this story loses one key point: most Americans are invested in the market. According to Gallup, 62% of Americans have shares, either through IRAs, 401 (k) or pension funds.
This means that retirees, middle-income workers and even union members like the United Auto Workers – many of whom have supported Trump’s tariff program – see their future financiers erode. Damage is not only in fairness lost. It’s in deferred pensions, spending cuts, and growing anxiety.
For those on the verge of retirement, this accident comes at the worst possible moment. They can’t afford to ski. Unlike young investors, they don’t have the luxury of time. When portfolios are contracted and social security remains static, lifestyle adjustments become inevitable: cost reduction, carry-over of large purchases or even return to the labour market.
Is Wall Street still a good power for the economy?
This is a question that economists have been encountering for decades. But from 2025, the answer is increasingly “yes”. The days when less than 25% of Americans took part in the market disappeared. That’s why the distinction between ”Wall Street” and “Main Street” has become increasingly blurred.
According to Ed Yardeni, “Wall Street is Main Street. Both streets thrive and suffer together.”
With three-in-five Americans now holding some form of equity investment, the effects of a bear market ripple quickly across the economy. Reduced net worth leads to reduced spending. Reduced spending hits business revenues. That, in turn, leads to layoffs and further economic contraction. It’s a cycle that feeds on itself.
The emotional balance is also real. Confidence, once shaken, is difficult to rebuild. The fear that dominates today’s titles has a cascade impact. The CEOs put the contract on hold. Consumers avoid money rather than spending it. Even those who are not directly affected financially can feel uncertain and shrink on important travel, housing and purchases.
Are these trade policies sustainable?
Trump’s administration has launched the idea of “retail” trade agreements to soften the deal. Negotiations would be under way with Japan and South Korea. His press secretary Karoline Leavitt tried to calm the fears by saying that personalized agreements will mitigate the damage. But such agreements take time. And the time is short when billions of market value evaporate every week.
Even if they succeed, these adapted agreements will not destroy the chaos already inflicted. Uncertainty about future tariffs and trade policy remains a matter of business decision. Businesses cannot plan long-term strategies when rules change at night. This lack of predictability may be more damaging than the tariffs themselves.
Moreover, there is skepticism as to whether the business strategy of the administration is economically or politically motivated. Calling a base frustrated by globalization can win votes, but if it leads to recession, the cost can be political and financial.
What if the market drops further?
According to RBC Capital Markets, the median decline in Slamp, P 500 in recession, is 27%. If the market believes that a recession is inevitable, it could continue to decline further. This would worsen the impact on retirement accounts, corporate income and consumer confidence.
There is also the psychological shift. Once fear is in place, even stable sectors can see declines. A scared market is volatile. And volatile markets are rarely good for long-term planning. This instability is particularly detrimental to small businesses and startups, which largely depend on stable credit conditions and investor appetite for risk.
Historically, the United States experienced a recession only in the first year of a new presidency without a pre-existing recession once in 1953. It happened in the heels of the Korean War. In this case, there is no external military conflict to blame. The “war” is a commercial war, and it has been self-reported. If a recession materializes, its architect will be difficult to challenge.
Even if the market resumes, the long-term credibility of US trade policy can already be compromised. International allies and economic partners may hesitate to recover fully, knowing that US policy could be around a campaign slogan or a political whim.
The economic fall is beginning to materialize. But writing is already on the wall: Trump’s tariffs reshape the market landscape in real time. If this change results in prolonged recovery or stagnation, it may depend on the speed with which your administration can rotate, or if it is willing to.
One thing is true: shock waves are not limited to bank balances and statements. They appear on kitchen tables, retirement dreams and daily options. For millions of Americans, “economic liberation” is beginning to look much more like a financial trap.
