President Donald Trump’s recent tariff announcement has sent shockwaves through the U.S. stock market, drawing comparisons to the Great Depression era. On April 2, 2025, dubbed “Liberation Day” by the administration, Trump imposed a 10% universal tariff and suspended country-specific reciprocal tariffs for 90 days. The market reaction was swift and severe, with the S&P 500 index plummeting 19% over the following five trading days.
The fallout from Trump’s trade policies has been far-reaching. The Dow Jones Industrial Average experienced its worst April performance since 1932, tumbling 9.1% in the first three weeks of the month. The S&P 500 has fallen 14% over the course of Trump’s second term, a decline rivaled only by Franklin Roosevelt’s term start in 1941.
The U.S. dollar has also weakened, falling 5.5% during Trump’s new term, the sharpest decline since Gerald Ford’s presidency. Investors are pulling money from American stocks and bonds, redirecting their funds globally. The MSCI All World Index, excluding the United States, has risen 2.9% during Trump’s new term.
Oil has plummeted 19%, marking the worst start to an administration since Bill Clinton’s second term in 1997. Conversely, gold has surged, climbing above $3,500 an ounce and skyrocketing nearly 25% during Trump’s new term.
Trump’s tariffs shake global markets
The International Monetary Fund (IMF) noted that Trump’s trade policies are instigating a new global economic era, predicting rapidly slowing economic growth and rising inflation in the United States. Goldman Sachs CEO David Solomon remarked, “The level of uncertainty is too high. It’s not productive.
It will have an effect on the growth of the economy, and we will see that, in my opinion, relatively quickly.”
Despite the current volatility, history suggests that a recovery is likely. The S&P 500 has experienced 32 corrections since its inception in 1957, gaining an average of 12% during the 12-month period following its first close in correction territory. However, the unique factors at play, such as the increased average tax on U.S. imports and the uncertainty surrounding tariff implementation, complicate the recovery process.
Many investors and business leaders believe that President Trump will eventually dial back his trade battles, but not everyone is willing to commit to that bet. The pushback from investors and CEOs has begun to put pressure on the administration, with reports suggesting that Trump may reduce tariffs drastically. Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick are reportedly advocating for a more moderate approach to avoid further market turmoil and legal battles.
As the situation remains fluid, the long-term implications for the U.S. market are yet to be determined. Patient investors may find opportunities in this turbulent period, but it is crucial to monitor developments and consider diversifying portfolios to mitigate risk in an unpredictable economic landscape.
