The Trump Tantrum That Tanked the Markets
Trump's economic playbook no longer prioritizes Wall Street, leaving investors to navigate the turmoil alone.
Editorial Team (ET)May 8, 2025
Investor expectations surrounding Donald Trump’s second term in office have taken a sharp turn, with Wall Street grappling with a market that no longer seems to have a safety net. After an initial surge of optimism, the S&P 500 hit a high on February 19. However, the aggressive escalation of trade tariffs—far beyond what investors initially dismissed as mere political rhetoric—has shaken market confidence.
The market correction, which saw the S&P 500 drop 10.1% from its peak by mid-March, underscores the investor whiplash caused by Trump’s approach. Tariffs on Canada, Mexico, and China, coupled with duties on steel and aluminum imports, sent clear signals that Trump’s trade war isn’t just a negotiating tool—it’s policy. For investors who believed in the so-called “Trump put”—a belief that the administration would intervene to stabilize markets—this sudden reality check has been unsettling.
No Bailout for Wall Street
Unlike his first term, where Trump frequently pointed to stock market performance as a measure of success, Trump 2.0 is proving to be less concerned with keeping investors happy. His administration's response to market anxieties has been blunt. Treasury Secretary Scott Bessent dismissed investor fears, stating that market corrections are "healthy" and nothing to worry about.
Chris LaCivita, a key Trump campaign figure, went even further, calling concerned investors “a bunch of bedwetters.” His assertion that the market was undergoing “shock therapy” reflects the administration’s willingness to let markets endure economic pain without interference. Trump himself reinforced this stance when he urged investors not to “watch the stock market” amid the ongoing sell-off.
The Death of the 'Trump Put'
Wall Street is now reevaluating its assumptions about Trump's priorities. During his first term, Trump often responded to stock market downturns with policy reversals or public reassurances. This time, however, there is no indication that he will shift course to cushion investor losses.
The big question remains whether the Trump put has disappeared entirely or if it has simply been delayed. Some analysts believe that once tax cuts and deregulation policies kick in, the markets will recover. Piper Sandler, for instance, still predicts the S&P 500 will reach 6,600 by the end of the year—a 17% gain from current levels. However, others remain skeptical, pointing out that sustained economic turbulence could lead to deeper losses that no amount of deregulation or tax incentives could easily reverse.
A New Era for Investors
Trump’s hands-off approach to market volatility represents a significant shift. While his administration remains focused on long-term economic policies, short-term market stability is no longer a priority. Investors accustomed to a president who viewed the stock market as a barometer of success are now navigating a landscape where volatility is met with indifference, if not outright dismissal.
The broader economic implications remain uncertain. If tariffs and trade conflicts trigger a recession, even Trump’s staunchest supporters on Wall Street may begin to question the administration’s strategy. For now, one thing is clear: under Trump 2.0, investors are on their own.
