Commentary: The Trump stock market crash will hurt Main Street more than Wall Street

Key Points

  • Trump's tariffs are causing a significant drop in the stock market, with the S&P 500 down 17% from its peak, nearly entering bear market territory.
  • Middle- and lower-income Americans are disproportionately affected by the stock market crash due to their investments in stocks through retirement plans like 401(k)s.
  • Tariffs disrupt labor markets by increasing costs for industries reliant on imported components, leading to job losses and reduced production in U.S. manufacturing.
  • Companies facing lower stock prices might cut jobs and reduce investments, potentially increasing unemployment rates significantly.

Summary

President Trump's aggressive tariff policies, which he believes will benefit ordinary Americans, are instead causing turmoil in financial markets and threatening economic stability. Since the announcement of these tariffs, dubbed "Obliteration Day" by investors, the S&P 500 has seen a sharp decline, wiping out nearly $11 trillion in wealth. Contrary to the narrative that only the wealthy are affected, middle- and lower-income Americans are significantly impacted through their investments in stocks, particularly via retirement accounts. These tariffs not only lead to direct financial losses but also distort labor markets by increasing costs for industries dependent on imports, potentially leading to job losses in manufacturing. Moreover, as companies face reduced stock valuations, they are likely to cut back on investments and employment, which could push unemployment rates up by as much as a full percentage point, affecting millions of American workers. The ripple effects of these policies suggest that the economic fallout will eventually impact all Americans, regardless of their direct involvement in the stock market.

yahoo
April 7, 2025
Stocks
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