Wall Street Grapples with Economic Pain Under Trump’s Tariff Policies

NEW YORK (AP) — The U.S. stock market continued its downward trend on Monday as investors grappled with the potential economic repercussions of President Donald Trump’s recent tariff policies. The S&P 500 plummeted 2.7%, pushing it to nearly 9% below its record high set just last month.

Investors are closely monitoring how much economic pain the Trump administration is willing to accept to achieve its policy goals. The Dow Jones Industrial Average fell 890 points, or 2.1%, while the Nasdaq composite experienced a sharper decline of 4%. This marked one of the most significant downturns for the market since 2022, raising concerns over investor confidence amidst escalating tensions around trade policies.

Brian Wesbury, a conservative economist and frequent commentator on Fox Business, described the economic outlook as “not a heart attack; it’s heartburn,” indicating that while the situation may not be dire, some discomfort is anticipated. “I still expect a recession, but this is not the Great Depression,” he added. “We’re going to make it through this.”

In a discussion on Fox News, economic analyst Jackie DeAngelis echoed similar sentiments, stating that Trump’s tariff policies are “really courageous” and will ultimately bring manufacturing back to the U.S. However, she acknowledged that the transition would take years, suggesting that Americans should brace for an extended period of economic difficulty.

Senator Tommy Tuberville of Alabama also addressed the nation’s economic situation, affirming that Trump has been transparent about the impending economic strain. “At the end of the day, there’s going to be a little bit of pain with this. And there is,” he said, emphasizing that history has shown the stock market typically rebounds from downturns.

Despite the turmoil, some analysts believe that Trump’s economic agenda could drive long-term growth. White House spokesman Kush Desai noted that numerous companies have made substantial investment commitments in response to Trump’s “America First” strategy, which he claims will create thousands of jobs.

Nonetheless, the immediate effects of tariffs have led to a slowdown in the job market, with economists reducing growth forecasts for the U.S. economy. David Mericle of Goldman Sachs revised his estimate, anticipating only 1.7% growth for 2025, a decrease from the previous estimate of 2.2%. He suggested a one-in-five chance of a recession occurring within the next year.

As Wall Street adjusts to these shifts, technology stocks have taken a severe hit. Big names like Tesla saw significant declines, with shares dropping 15.4% on Monday alone, contributing to a total loss of 45% in 2025. This contrasts sharply with the company’s strong performance over the previous two years, raising concerns about its future direction under the current economic climate.

The broader market also reflects growing investor caution, with treasury bond yields declining as more individuals seek safer investments amidst economic uncertainty. The yield on the 10-year Treasury fell to 4.22%, a noticeable drop indicating shifting investor sentiment.

International markets mirrored these struggles, with European indices following U.S. declines as mixed results emerged from Asian markets. China‘s recent economic data, showing a downturn for the first time in 13 months, further compounded fears about global economic health.

The AP’s Seth Sutel contributed to this report, highlighting how questions about the economy’s stability and the potential for recession loom large over market transactions.