Wall Street was later shocked by U.S. President Donald Trump's announcement on tariffs. The financial sector, which had supported him hoping for tax cuts and deregulation, was flustered by the unpredictable reinforcement of protectionism, and voices of self-reproach saying, "We misunderstood Trump" are spreading. The S&P 500 index saw $5 trillion evaporate in two days, and government bond yields surged, spreading anxiety throughout the market.
According to the Financial Times (FT), Wall Street, which had supported Trump again in light of his reelection, is now facing the shock of tariffs and is expressing delayed remorse, saying, "We misjudged Trump." Major asset management firms, investment banks, and law firms are incurring losses one after another, and the shockwave is spreading throughout the financial sector.
According to FT, at a conference hosted by the Saudi sovereign wealth funds in Florida last February, Wall Street moguls stood in line for hours to listen to President Trump’s speech. At that time, the market was continuing to rise, and Trump’s tariff policy was interpreted as a type of growth strategy. However, just two months later, the situation changed dramatically. The announced tariff measures earlier this month shook the financial market and simultaneously heightened concerns about inflation and recession.
In particular, Wall Street expected that President Trump would continue the tax cuts and deregulation approach he showcased during his first term, but in reality, he is prominently advocating domestic protectionism and anti-globalization, which completely deviated from expectations. The criteria for imposing tariffs are also unclear, and the simultaneous outflow of foreign investors' funds has meant that some large pension funds and private equity funds are unable to escape declines in revenue and investment losses.
FT analyzed that "President Trump’s economic policy is focused more on middle-class voters than Wall Street," noting that "this kind of populism can structurally increase uncertainty in the U.S. financial market." Immediately after the tariff announcement, the stock prices of large financial institutions such as BlackRock, JPMorgan, and Apollo fell collectively, and the number of mergers and acquisitions (M&A) dropped to its lowest level in 10 years. The White House has sought to quell concerns, urging, "Trust President Trump," but the market has reacted coldly.
Within Wall Street, skepticism is rising with comments such as "Trump was never Wall Street’s president to begin with" and "We underestimated him." Some billionaire hedge fund managers have publicly expressed their dissatisfaction through social media, but the majority of financial sector personnel are choosing silence for fear of government retaliation.
Michael Semblarest, chair of market and investment strategy at JPMorgan, noted, "This is the first time I've had to consider not just the outlook for the market but also how my statements will affect it,” pointing out that the decision-making structure of the Trump administration is stirring investor anxiety. As President Trump essentially closes communication channels with the financial sector and continues unilateral decisions, the market is increasingly losing trust in the previous assumption of a "predictable president."
Ultimately, President Trump took a step back on the morning of the 9th, announcing a 90-day suspension of mutual tariffs, but this is widely viewed as a temporary measure to calm financial market turmoil. Compounding risk signals such as instability in the bond market, a weaker dollar, and soaring interest rates are still ongoing, and the market is tense about the new "Trump risk."