Grading Trump's first 100 days
The promise of Trump’s second term was rooted in a familiar refrain: “Make America Great Again,” now with an economic twist — “Make America Affordable Again.” His campaign painted a vision of strong growth, free from global trade imbalances and bureaucratic overreach. Investors, initially seduced by this narrative, propelled the S&P 500 to record highs in the weeks following his November 2024 victory. Yet, the euphoria was short-lived. As Morningstar’s analysis starkly illustrates, the first hundred days, culminating on April 30, 2025, saw stocks plummet nearly 8%, a stark contrast to the bullish optimism of late 2024. The catalyst? Tariffs, wielded not as a scalpel but as a sledgehammer, reshaped the economic landscape with a ferocity that caught even seasoned analysts off guard.
Trump’s tariff strategy, unveiled with characteristic bravado, began with a salvo against America’s closest neighbors. In late January, he announced 25% levies on imports from Canada and Mexico, citing border security and trade imbalances. By April 2, the administration escalated with “reciprocal” tariffs targeting dozens of trading partners, including a staggering 125% duty on Chinese goods. These measures, intended to protect American industries and bolster domestic manufacturing, instead ignited a global firestorm. The S&P 500, as reported by Reuters, shed $5 trillion in market value over the two days following the April 2 announcement, marking its worst two-day loss since the pandemic-induced market panic of March 2020. The CBOE Volatility Index (VIX), Wall Street’s “fear gauge,” spiked to 60 points, a level unseen since the 2008 financial crisis, reflecting a market gripped by “extreme fear,” according to CNN’s Fear and Greed Index.
The economic rationale behind Trump’s tariffs was rooted in a protectionist ethos: shield American workers from cheap foreign goods, force trading partners to the negotiating table, and fund domestic priorities through tariff revenue. Yet, as Preston Caldwell, Morningstar’s senior U.S. economist, noted, the policy’s execution was a masterclass in disruption. The average U.S. tariff rate soared to 20%, with China facing a de facto embargo at 125%. This was no mere tweak to trade policy; it was, as Caldwell described, “the most restrictive trade regime in over a hundred years.” The global economy, far more interconnected than in the era of the Smoot-Hawley Tariff Act of 1930, reeled from the shock. Retaliatory tariffs from China (84% on U.S. goods), Canada, and Mexico further tightened the screws, threatening supply chains and inflating costs for American consumers.
The bond market, typically a bastion of calm, became an unlikely epicenter of concern. Morningstar’s charts reveal a curious anomaly: U.S. Treasury yields, which typically fall during economic uncertainty as investors flock to safe-haven bonds, instead climbed sharply post-April 2. The 10-year Treasury yield, which had been hovering around 4.3% by April 10, reflected concerns about tariff-induced inflation. Caldwell projected a 0.6 percentage point increase in the Personal Consumption Expenditures Price Index for 2025, reaching 3.0%, and a 1.3-point jump to 3.2% in 2026. Federal Reserve Chairman Jerome Powell, under relentless pressure from Trump to cut interest rates, warned that tariffs would likely stoke inflation while slowing growth — a toxic brew that could force the Fed into a policy bind. The New York Times likened the scenario to a “hurricane forming out in the ocean,” a slow-moving, self-inflicted storm with the White House at its eye.
Amid the turmoil in the equity market, gold emerged as a beacon for skittish investors. Morningstar notes that the precious metal’s price soared from $2,755 per ounce in January to over $3,400 by April, a 26% surge that outpaced even the most optimistic forecasts. Gold, long a hedge against economic and geopolitical instability, became the “most crowded trade” in April, according to a Bank of America survey cited by CNN. Conversely, cryptocurrencies, despite Trump’s campaign pledge to make America the “crypto capital of the planet,” faltered. Bitcoin, which briefly touched $109,000 in late 2024, has slid double digits since Trump’s inauguration, trading more like a tech stock than a dollar alternative, as risk-off sentiment dominated markets.
The human toll of this economic upheaval was palpable. Consumer sentiment, as The Economist reported, plummeted to a 12-year low, with pessimism transcending partisan lines. Small businesses, particularly those reliant on imported goods, faced crushing cost increases. The New York Times highlighted the plight of companies like General Motors, which withdrew its full-year forecast amid tariff uncertainty. Corporate earnings projections, once buoyant, were slashed; Goldman Sachs, Barclays, and UBS all lowered their year-end targets for the S&P 500, with Goldman revising its forecast from 6,500 to 5,700. The specter of recession loomed large, with Morningstar estimating a 40-50% probability over the next year, a view echoed by economists surveyed by Reuters who cited tariff disruption as a primary driver.
Yet, Trump’s tariff gambit had its defenders. The administration, led by figures such as National Economic Council director Kevin Hassett, argued that the market’s reaction was exaggerated. Hassett, appearing on Fox News, claimed that over 15 countries had already tabled trade deal offers, with negotiations nearing 20 nations. The White House pointed to $1.75 trillion in investment commitments and a 90% reduction in border crossings as evidence of broader policy success. Scott Bessent, Trump’s treasury secretary, dismissed stock market corrections as “healthy” and “normal,” framing the tariffs as a necessary transitional pain for long-term gain. On X, voices like @Market_heretic celebrated the administration’s audacity, noting that a 90-day tariff pause announced on April 9 sparked a 9.5% S&P 500 rally, the index’s best single-day gain since 2008.
Critics, however, were unsparing. Senate Minority Leader Chuck Schumer, in an April 8 post on X, branded Trump’s tariffs “the largest tax hike on families since the Vietnam War,” accusing them of wiping trillions from retirement savings and pushing consumer confidence to a four-year low. The New York Times’ DealBook column dubbed the first hundred days a period of “market chaos and economic uncertainty,” contrasting sharply with the resilience of Trump’s first term, when the S&P 500 climbed nearly 70%. Former Treasury Secretary Lawrence Summers, speaking on Bloomberg’s Wall Street Week, described the period as “the least successful 100 days of a new president since the Second World War,” a verdict rendered not by partisans but by the unforgiving judgment of markets.
While a temporary salve, the tariff pause on April 9 did little to quell the underlying unease. Reuters noted that the pause applied to many countries but retained a 10% blanket duty on most U.S. imports, with China still facing punitive levies. The damage, as Deutsche Bank’s George Saravelos warned, was already done: “a permanent sense of unpredictability in policy” now haunted the economy. European nations, such as Ireland and Germany, which are heavily reliant on U.S. exports, braced for further pain. At the same time, China’s retaliatory measures and potential yuan devaluation signaled a protracted trade war. The dollar, once bolstered by expectations of Trump-fueled growth, shed nearly 10% against the euro in April, according to Reuters, as investors questioned America’s status as a safe haven.
What lies beyond the hundred-day mark remains uncertain. Morningstar’s Caldwell warns of persistent inflation and a high risk of recession, while optimists like Bessent envision a restructured global trade order that favors American interests.
For now, Trump’s second-term economic narrative is one of disruption and division, a high-stakes gamble that has left markets reeling and the nation on edge. As the next hundred days unfold, the question is not merely whether Trump’s tariffs will deliver on their promise but whether the American economy can weather the tempest he has unleashed.