So far, congressional Republicans are giving Trump Tariffs 2.0 the benefit of the doubt. Some are voicing their concerns. A few Senate Republicans are joining the Democrats in the Senate to support a bill to cancel Trump’s tariffs on Canada. But it won’t pass in the House, and Trump has already said that he won’t sign it.
Meanwhile, the Stock Market Vigilantes aren’t giving Trump Tariffs 2.0 the benefit of the doubt. The S&P 500 and the Nasdaq plunged 9.9% and 10.7% from April 1, i.e., the day before Liberation Day through Friday’s close (Fig. 1 below and Fig. 2 below). They are now down 17.4% and 22.7% from their respective record highs on February 19 and December 16.
Figure 1
Figure 2
In other words, Liberation Day has been followed by Annihilation Days in the stock market.
On Saturday morning, I nearly gagged on my bagel listening to a CNN interview with Peter Navarro. The President’s senior counselor for trade and manufacturing declared that the tariffs are aimed at benefiting Main Street, not Wall Street. Other senior officials in the Trump administration, including Treasury Secretary Scott Bessent, have said the same.
I have news for them: Wall Street is Main Street. Wall Street matters a great deal to Main Street. Main Street owns lots of stocks in American corporations that are facing massive disruptions as a result of Trump Tariffs 2.0. Navarro predicted that the stock market will bottom “soon” and that the stock market rally will broaden to include the S&P 493 and not just the Magnificent 7. Navarro also predicted that the Dow Jones will rise to 50,000 by the end of Trump’s term. He implored the media to accentuate the positives of Trump’s tariffs. In fact, the media was just as surprised by last week’s stock market rout as were Wall Street and Main Street.
Congress is about to get an earful. Main Street undoubtedly will voice our anger about the immediate adverse effects of Trump’s tariffs on our investment and retirement portfolios. Senior citizens who have retired or were planning to do so must be especially mad. The administration’s response is that the short-term pain will be worth the long-term gain. The problem is that Americans don’t do pain very well and aren’t convinced that the eventual gain will be worth it. So the pressures on congressional representatives from their constituencies to stop the tariff madness will be intense in coming days, especially if the stock market continues to crash.