Our forthcoming book is The Comeback: The 2024 Elections and American Politics. The second Trump administration is off to an ominous start.
Wall Street is having another growth scare.
Investors entered 2025 optimistic that an already strong U.S. economy could get an extra boost from an administration pushing market-friendly tax cuts and regulatory rollbacks. Instead, trade tensions and signs of slowing growth have driven major indexes lower in recent weeks.
The declines accelerated this week as Trump imposed 25% tariffs on the U.S.’s major trading partners—forcing investors to rethink how serious he is about pursuing a broadly protectionist agenda.
Losses have been particularly acute in sectors that investors view as sensitive to a slowdown, such as banks and smaller companies. The tech-heavy Nasdaq Composite has fallen 7.5% since mid-February. Oil prices have slipped. Havens including gold and U.S. Treasurys, meanwhile, have rallied.
“I think a lot of people were just assuming that tariffs was just a bluff, and now there’s more uncertainty around that,” said Keith Lerner, co-chief investment officer at Truist Advisory Services.
The moves show investors struggling to gauge if the conditions underpinning two straight years of near-25% stock gains have deteriorated significantly. While few analysts thought stocks could do quite that well this year, most still thought that they could keep marching higher.
