Markets Give U.S. Tariff Program Little Benefit of the Doubt – Currency Thoughts
Markets Give U.S. Tariff Program Little Benefit of the Doubt
April 5, 2025
It is customary when America gets a new president for financial markets to give the new leadership a honeymoon period. Call it benefit of the doubt. For example, when Donald Trump became president the first time on January 20, 2017, he introduced some radical economic policy proposals including tariffs, and painted a picture of U.S. conditions at the time that used unorthodox, even scary, language:
This American carnage stops right here and stops right now.
And yet between that day and April 4, 2017, a span of ten and a half weeks, the Dow Jones Industrials rose by 4.3%. That was similar to a gain 4.0% in the DOW between January 20, 1993 and April 4, 1993 at the start of Bill Clinton’s presidency. The market performance at the start of George H. W. Bush’s presidency, who when sworn in on January 20, 1989 followed the highly popular Ronald Reagan, experienced a 2.8% rise in the DOW by the ensuing April 4th closing. His son, George W. Bush, started his presidency just a month and a half before the beginning a a U.S. recession that depressed the DOW by 101% between January 20, 2001 and April 4, 2001.
The presidencies of Barack Obama and Joe Biden began under very difficult circumstances. When Obama was sworn in on January 20, 2009, the United States was thirteen months deep into recession and gripped by a financial market crisis that was potentially more dangerous than what had been experienced in the Great Depression. Biden came into office two weeks after rioters had stormed the U.S. Capitol Building and just a month after the first Covid vaccine had been taken. Much of America was still under lockdown.
Nonetheless, between January 20 and April 4 of 2009, the DOW eked out a gain of 0.9%, and from January 20, 2021 to April 4, 2021, the index climbed by 5.8%.
Markets are giving Trump no such honeymoon. Comparing closing levels yesterday to those on January 20, 2025, the DOW had fallen by 11.9%, and that movement was not as steep as other stock market barometers such and the S&P 500 (down 15.4%) or the Nasdaq (a bearish drop of 20.6%). Meanwhile, the 10-year Treasury yield has plunged 64 basis points in a further sign of likely weaker economic growth to come.
Trump 2.0 has the world’s attention, not just America’s, and the mood is one of considerable fear, not the kind of emotion one ordinarily associates with greatness.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: stock markets under Trump’s second term
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