After the announcement of reciprocal tariffs by U.S. President Donald Trump caused trillions of dollars to vanish in two days, major investors and financial institutions on Wall Street are preparing for greater market turmoil. Nevertheless, President Trump maintained his position, saying, "Sometimes you have to take medicine."
On the 6th (local time), The New York Times (NYT) reported that the speed of the recent plunge in the U.S. stock market is faster than during the COVID-19 pandemic. At that time, the market fell about 10% over two days, and the extent of the decline was relatively limited within a short period, but this time, it is assessed as a decline comparable to the 2008 Lehman Brothers crisis.
In fact, the impact of the reciprocal tariffs is being felt across the entire U.S. economy. According to NYT, most hedge funds on Wall Street suffered losses, and there is even a sense of competition over "who lost less." Corporations are considering postponing major mergers or initial public offerings (IPOs), and major banks are preparing contingency scenarios for clients' massive losses. Some clients are being asked for additional funds to maintain loans.
Another feature of this market shock is the lack of expectation for government intervention. As the White House's tough tariff policy shakes the global economic order, even prominent figures on Wall Street are showing a sense of powerlessness, indicating that they can no longer exert influence. Among them are those who previously supported Trump.
It is still difficult to predict how severe the impact of the tariffs will be. Bank of America (BoA) has suggested regarding President Trump's tariff policy that "if target countries implement retaliatory tariffs, profits for Standard and Poor's (S&P) 500 corporations could decrease by up to one-third."
Despite the market turmoil, President Trump continues to maintain his stance. On that day, he met with reporters aboard a private jet heading from Florida to Washington, D.C., and said, "The U.S. cannot continue to suffer a $1.9 trillion trade loss. That is not sustainable," adding, "Sometimes you have to take medicine to fix something."
When asked if the stock market crash was intentional, he replied, "No. It is not," and stated, "I want to solve the trade deficit with China, the European Union, and other countries." When asked how much of a market decline he could tolerate, he dismissed the question, calling it "stupid" and asserted, "I don't want anything to fall."
The U.S. government plans to implement the reciprocal tariffs scheduled for the 9th without delay. Howard Rutnick, the U.S. Secretary of Commerce, appeared on CBS News on the 6th and stated, "Tariffs will be imposed on the 9th and will be maintained for a few days to a few weeks."
He noted, "We have to protect ourselves, and every country in the world has to stop robbing us," adding, "America is recording a $120 billion trade deficit annually, and the scale is growing, and ultimately we will not own America, and even without a war, we will be owned by other countries in the world."
He further elaborated, "We can't use our country's planes, and we don't have our semiconductors. This is what President Trump is trying to fix for America," and reiterated, "Tariffs will be imposed," asserting, "What President Trump announced is not a joke."