President Donald Trump’s tariffs and trade policies are causing stock market volatility and raising concerns among investors. The S&P 500 has dropped about 9% from its record high as inflation and growth worries increase. Treasury Secretary Scott Bessent says the White House is focused on the real economy, not market volatility.
However, a significant stock market decline could dampen consumer spending and economic growth. Marko Papic, chief strategist at BCA Research, believes a 15% to 20% drop in the S&P 500 would force Trump to walk back his trade war. Desmond Lachman, a senior fellow at the American Enterprise Institute, thinks the speed and disorderliness of the sell-off matter more than the total drawdown.
Trade policies spark market concerns
Financial markets may be the last true check on Trump’s power, as investors will dump stocks regardless of his opinion. If economic volatility continues, other checks on Trump’s policies could emerge.
Republican members of Congress might dissent to make a name for themselves if the economy weakens and the stock market reels. Trump’s consolidation of power could look very different in a few months if the situation worsens. The ongoing stock market sell-off could compel President Trump to reconsider his trade war policies, especially if the economic consequences start affecting average Americans and eroding his political base.
The market’s reaction to Trump’s policies will be a key factor in determining the future course of his administration.
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