Yesterday, you could watch the stock market melt down in real-time as President Trump announced his tariff action plan from the Oval Office.
The visual was pretty stunning:
Even FOX News couldn’t help but juxtapose President Trump’s comments with the real-world effect it had on stocks.
President Trump has called “tariff” the most beautiful word in the English language.
And admittedly, there IS an argument for some targeted tariffs, like the ones President Trump imposed to protect the U.S. Steel sector in his first term — tariffs which the Biden Administration supported.
But only 51% of voters in his own party support raising tariffs on foreign goods, according to a recent YouGov poll — and just 25% of American adults overall:
The fear around tariffs, more than their actual immediate impact, is what caused the stock market to sink yesterday and this morning.
Investors are always looking for an excuse to be either bearish or bullish — and with rising global tensions, lingering inflation, new A.I. threats from China, and now growing tariffs, there are far more reasons to be bearish right now.
The stock market turn might signal a growing distrust in the new administration overall.
Early in his second term, President Trump garnered big political victories by focusing on issues with which a large majority of Americans agree: cutting down illegal immigration, cutting spending at the federal level, ending controversial progressive policies.
But in the last week, Trump has started to push hard into areas where he will not receive broad support, whether it's getting too close to Russia’s Vladimir Putin, whose country received support from only 4% of Americans in a recent poll, or turning up the temperature on tariffs.
The stock market might be the best bellwether for President Trump’s approval.
Early after his election, markets roared higher in anticipation of the incoming administration — until he started to get serious about tariff talks.
Now, with the latest round of tariff enforcement, the entire post-election rally has been wiped out, taking trillions of dollars in value with it.
Tonight, President Trump addresses a joint session of Congress in what will be the first major speech of his term.
And one hopes he’ll present a clear message on his reasoning for tariff policy, the blowup with Zelenskyy, and other controversial issues — even if many disagree with him, the American people deserve to know where he stands and why he’s doing the things that he is doing.
The markets will be watching carefully, I’m sure, and Wednesday’s open will teach us a lot about whether we’re in an extended bearish mood or whether Trump calms any frayed nerves.
A sympathetic reading of Trump would admit he’s got a difficult job: stimulate the economy and cut spending while continuing to battle inflation and try to bring an end to two wars overseas which, as he is so fond of reminding everyone, didn’t start on his watch.
Only two questions remain: first, whether tariffs are a wise means to any of those ends.
Clearly, the markets aren’t buying that case. Trump’s job tonight, should he choose to accept it, will be to use the bully pulpit to present that case to them and change their minds.
If he succeeds, then we’ll see a rally as soon as tomorrow morning. If he doesn’t (which, for what it’s worth, I think is the more likely outcome), then the markets will continue to sell off and lead to big red days.
And that leads to the second question: how long will President Trump be able to tolerate a stock market hit? Which is stronger: his belief in the long-term value of tariffs, or his desire to keep a strong stock market, high approval ratings, and have a shot to grow his control in Congress come the 2026 midterms?
My take is this: no one, especially in our line of work, wants to see red when they pull up their favorite trading app. But in the short term, if you’re a tariff skeptic, it’s probably the best thing that can happen.
Trump has talked a big game about tariffs, but has also shown a readiness to back down from them pretty quickly. A flagging stock market will be a clear sign to him that his rhetoric isn’t working, and I think the best shot anyone has of convincing him to change course.
It will take time to play out.
For now, your best bet is to focus either on straight bearish strategies or on more direction-neutral income plays.
Jack’s sharing one of those tomorrow, actually — check out more information here.
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