Does the Trump bear market bring the S&P 500 Index down to 4000? Does it result in a drop of S&P earnings (2025–2026) from the pre-Trump Tariff War estimate of $260–$270 down to the $200–$220 range?
Worst case: Yes! With a serious recession and more upheaval.
Best case: Rapid trade deals are made, and the tariffs are quickly reversed. Market sentiment remains injured, but actual earnings are not as badly hit, and the stock market recovers in the medium term. Remember, the tariff levels presently anticipated are the highest in over a century.
Trump is unpredictable, and his approval rating is falling in the polls. Some Republican supporters are distancing themselves from him. Even Senator Ted Cruz is a tariff critic. Old advice from sailors: “When the rats are leaving a sinking ship, follow the rats.” Opposition to Trump’s unbridled power to impose tariffs is now growing among some GOP senators (“7 GOP senators sign on to bill to check Trump’s trade authority,” https://thehill.com/homenews/senate/5236142-congress-tariff-bill-trump/). On the House side, Don Bacon (R-Nebraska) has stepped up to propose that Congress take back the authority to decide tariffs in anything other than an emergency (“Bacon to introduce bill to give tariff authority back to Congress,” https://www.ketv.com/article/bacon-to-introduce-bill-to-give-tariff-authority-back-to-congress/64401194). Time will tell what measures might be taken.
Here’s a reading/viewing list for those who want diverse views and serious evidence.
The behavior of Donald Trump in his first 100 days as president has raised the cost of borrowing for the entire array of all federal agencies and all arms of the US government.
To understand the mess that the Trump tariffs rollout, math errors, bombastic threats, and chaos have caused, you need only put yourself in the position of a merchant in America.
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