Investors are reevaluating how to navigate the complexities of U.S. President Donald Trump’s recent policy shifts, which seem to suggest that the so-called “Trump put”—a belief that he would take necessary measures to support stock market prices—is dwindling. This notion has been challenged by Trump’s increasingly rapid implementation of tariffs, which have unsettled the stock market and raised concerns about the administration’s focus shifting from equity markets to bond markets. Initially, many investors were optimistic that Trump’s agenda, centered around tax cuts and deregulation, would replicate the favorable market conditions seen during his first term.
The “Trump put” assumes that his administration would prioritize keeping stock market investors satisfied. However, his new tariff policies have had the opposite effect, diminishing consumer and business confidence and potentially signaling a less market-friendly approach. Economists like Ben Harris, who previously served as chief economist at the U.S. Treasury, note this change in strategy.
In his recent address to Congress, Trump highlighted falling Treasury yields and neglected to mention the stock market, a significant departure from his 2017 address where he celebrated its growth since his election. Underpinning this shift, Treasury Secretary Scott Bessent is working to lower yields on U.S. Treasury bonds, emphasizing the administration’s concern over rising government debt. The combination of implemented tariffs and proposed spending cuts suggests recognition of risks associated with debt that could destabilize the bond market.
As the S&P 500 index has dropped over 3% since Trump’s inauguration, questions linger about how his tariff strategies will impact the economy. Although some experts predict that these tariffs could eventually lead to manufacturing growth, others, like George Cipolloni of Penn Mutual, caution against jeopardizing economic stability for short-term gains. Overall, while the stock market remains important for Trump, the administration’s approach appears to focus on broader economic measures that include tariffs and potential tax cuts.
Despite current challenges, some industry analysts hold the belief that Trump may seek to avoid shocking the market as negotiations and economic strategies continue to unfold.