Wall Street Speaks Out Against Tariffs

Summary

Podcast Summary: The Journal – Episode: Wall Street Speaks Out Against Tariffs

Introduction and Market Impact

In the April 7, 2025 episode of The Journal, hosts Kate Linebaugh and Ryan Knutson, alongside co-host Jessica Mendoza, delve into the seismic effects of President Donald Trump's recent tariff policies on global financial markets. The episode opens with Kate Linebaugh highlighting the immediate turmoil caused by the tariffs:

Kate Linebaugh [00:00]: "Since President Trump announced sweeping tariffs last Wednesday, markets around the world have tanked."

Gregory Zuckerman, a seasoned market analyst with the Wall Street Journal since 1996, provides a stark overview of the market descent:

Gregory Zuckerman [00:13]: "The Dow plunged more than 2300 points. S&P sank 322."

He continues to detail the unprecedented scale of the downturn:

Gregory Zuckerman [00:19]: "US markets losing trillions, over $5 trillion in just a matter of days. European markets are also down about four and a half percent across the board."

Trump’s Tariff Policies

The discussion shifts to President Trump's aggressive tariff strategies, which have introduced uncertainty across global markets. Trump’s proclamation of "Liberation Day" signifies his commitment to reshaping American industry through tariffs:

Donald Trump [03:55]: "My fellow Americans, this is Liberation Day waiting for a long time. April 2, 2025, will forever be remembered as the day American industry was reborn."

Gregory Zuckerman critiques the administration's approach, labeling the tariffs as "reciprocal," a term Trump uses to justify measures against trade deficits:

Gregory Zuckerman [04:21]: "They're called reciprocal. … sometimes it is just the fact that the United States is the wealthiest country in the world. So it makes sense that we have a trade deficit with others."

Wall Street’s Initial Reaction

Initially, Wall Street executives were somewhat complacent, focusing more on favorable policies like tax cuts and deregulation rather than the looming threat of tariffs:

Gregory Zuckerman [02:46]: "Wall street investors and executives weren't really as focused on tariffs and the talk about tariffs as they should have been."

However, the sudden implementation of comprehensive tariffs disrupted this outlook, leading to immediate market instability.

Shift in Wall Street Sentiments

As the financial impact became apparent, the sentiment on Wall Street shifted from indifference to alarm. Zuckerman describes this shift as unprecedented:

Gregory Zuckerman [01:25]: "This is the first time one can argue it's been self-inflicted. It's a series of decisions that have resulted in a financial crisis."

Investors expressed confusion and fear, as there was no historical precedent for a crisis induced directly by government policy in this manner.

Prominent Figures’ Pushback

Over the weekend following the tariff announcement, Wall Street's elite began voicing their opposition. Influential figures like billionaire hedge fund manager Bill Ackman and investor Stanley Druckenmiller publicly criticized the tariffs:

Bill Ackman: Called for a "90 day pause in the tariffs and warned that the alternative would be a self-induced economic nuclear winter."

Stanley Druckenmiller: Opposed tariffs exceeding 10%.

Gregory Zuckerman notes the gravity of this pushback, emphasizing that even traditionally pro-Trump leaders are now speaking out:

Gregory Zuckerman [10:22]: "Even those many of these individuals were supportive of Donald Trump and the recent election. So that's what is also noteworthy."

JPMorgan CEO Jamie Dimon added his voice to the chorus of concern, issuing a 60-page statement that included cautionary remarks about the tariffs' long-term effects:

Jamie Dimon [11:41]: "The new tariffs will slow down growth and erode America's long term economic alliances."

Administration’s Response

In response to the growing dissent from Wall Street, the Trump administration remained steadfast in its tariff policies. President Trump articulated a willingness to negotiate but maintained a tough stance:

Donald Trump [12:59]: "Sometimes you have to take medicine to fix something."

Despite outreach from 50 countries seeking negotiations, Trump hinted at the possibility of permanent tariffs and even threatened additional tariffs against China:

Donald Trump [12:59]: "There can be permanent tariffs and there can be negotiations."

Potential Economic Implications

Gregory Zuckerman explores the broader economic ramifications of the tariff-induced market instability. He speculates on the potential onset of a bear market, defined as a stock index drop of 20% from a recent peak:

Gregory Zuckerman [13:37]: "It's hard to predict these things. We are close to a bear market, so we're not too far away."

Zuckerman also raises concerns about the long-term impact on free trade and the global leadership role of the United States:

Gregory Zuckerman [14:22]: "What if they change their minds in six months, in a year and they put them on again? It's going to create uncertainty for the near future."

Impact on Everyday Americans

The episode underscores that the market turmoil extends beyond Wall Street, affecting everyday Americans through retirement accounts, savings, and employment opportunities:

Gregory Zuckerman [15:08]: "Every American to some extent is affected by the market, even if they're not investing in stocks."

He further explains that corporate uncertainty may lead to reduced hiring and spending, potentially increasing unemployment rates:

Gregory Zuckerman [15:08]: "When executives are unsure, then they don't hire or they cut back on spending and that affects hiring."

Conclusion

As the episode wraps up, the hosts reflect on the volatile market conditions, noting a slight stabilization in major indices but acknowledging the ongoing uncertainty:

Kate Linebaugh [16:15]: "After wild swings through the day, the Dow and The S&P 500 fell less than 1% today. The NASDAQ gained slightly."

The discussion highlights a critical moment in American economic policy, where tariff decisions are reshaping market dynamics and challenging the foundations of free trade capitalism. Wall Street's unprecedented pushback signals a potential shift in future economic strategies and underscores the interconnectedness of government policy and financial stability.

Notable Quotes with Timestamps

• Gregory Zuckerman [01:25]: "This is the first time one can argue it's been self inflicted. It's a series of decisions that have resulted in a financial crisis."

• Bill Ackman [09:51]: "A 90 day pause in the tariffs and warned that the alternative would be a self induced economic nuclear winter."

• Jamie Dimon [11:41]: "The new tariffs will slow down growth and erode America's long term economic alliances."

• Gregory Zuckerman [15:08]: "Every American to some extent is affected by the market, even if they're not investing in stocks."

Final Thoughts

This episode of The Journal provides an in-depth analysis of the cascading effects of Trump's tariff policies, highlighting the unprecedented backlash from Wall Street and the palpable anxiety among investors and executives. The conversation paints a picture of an economy at a crossroads, grappling with the immediate fallout and contemplating the long-term implications for global trade and American economic leadership.

Transcript

[Kate Linebaugh]

Foreign Since President Trump announced sweeping tariffs last Wednesday, markets around the world have tanked.

[Gregory Zuckerman]

The Dow plunged more than 2300 points. S&P sank 322.

[Kate Linebaugh]

Nasdaq tumbled 962.

[Gregory Zuckerman]

Now Asian markets also plunged overnight. US markets losing trillions, over $5 trillion in just a matter of days. European markets are also down about four and a half percent across the board. Econom Warren that will tip the world's largest economy into a recession here. Carnage, panic, bloodbath doesn't even begin to cut it.

[Kate Linebaugh]

Our colleague Gregory Zuckerman has been covering markets for the Wall street journal since 1996.

[Gregory Zuckerman]

This is the most disturbed and discouraged and disheartened I've seen people on Wall street about policies in Washington, D.C. how.

[Kate Linebaugh]

Many market downturns have you seen?

[Gregory Zuckerman]

I've seen a lot of crises. I covered the 1998 Long Term Capital collapse, covered the tech meltdown. I covered 2008 and the housing collapse coronavirus crisis. So I've seen a lot of financial crises in my career.

[Kate Linebaugh]

How does this one compare?

[Gregory Zuckerman]

This is unique. This is the first time one can argue it's been self inflicted. It's a series of decisions that have resulted in a financial crisis. I've never seen that before. This is the first time I've ever seen government officials create a crisis.

[Kate Linebaugh]

And now Wall street is starting to push back on Trump's tariffs. Welcome to the Journal, our show Business and Power. I'm Kate LINEBAUGH. It's Monday, April 7th. Coming up on the show, the tariff sell off and Wall Street's pushback. So going back to Trump on the campaign trail, he openly touted his love for tariffs then they will pay a.

[Donald Trump]

Very stiff tariff when they send their products into the United States for the privilege of.

[Kate Linebaugh]

What were Wall street executives saying during the campaign?

[Gregory Zuckerman]

Wall street executives were a little bit self delusional. I think during the campaign. They heard the talk about tariffs, but they weren't focused on them. They were instead focused on things like lowering taxes, which Donald Trump is still promising and working on eliminating or weakening regulations. There was a feeling that deals were going to come m and a IPOs, other kind of things that Wall street executives really prosper and wish for and hope for. So Wall street investors and executives weren't really as focused on tariffs and the talk about tariffs as they should have been.

[Kate Linebaugh]

Since taking office, Trump has threatened broad tariffs on countries all around the world. He's enacted some like those on China, Canada and Mexico. And he'd raised the idea of a blanket 10% tariff on all imports. And last Wednesday, on what he called Liberation Day, Trump unveiled a new comprehensive tariff policy.

[Donald Trump]

My fellow Americans, this is Liberation Day waiting for a long time. April 2, 2025, will forever be remembered as the day American industry was reborn. The day American.

[Gregory Zuckerman]

Then he brought the details. He shared the details of what would come on top of the 10%. And that stunned people.

[Kate Linebaugh]

And what was that?

[Gregory Zuckerman]

Well, almost every country was hit with various types of additional tariffs.

[Kate Linebaugh]

Reciprocal tariffs.

[Gregory Zuckerman]

They're called reciprocal. I don't know how they define that, frankly. They use that word reciprocal. But they're really just seizing on the fact that we in the United States have. Have a trade deficit with many countries. And to Donald Trump and others in administration, that is, in effect, a tariff, I think they're saying, but it's not really a tariff. And as they teach in Economics 101, trade deficits aren't necessarily and aren't always because others are cheating us. Sometimes it is as a result of manipulation, be it currency or other kinds of things, but sometimes it's just the fact that the United States is the wealthiest country in the world. So it makes sense that we have a trade deficit with others. We buy more of their goods than they buy of ours.

[Kate Linebaugh]

Almost immediately after Trump's announcement, the markets responded.

[Gregory Zuckerman]

Yeah, the market did more than fall on Thursday and Friday. It tumbled, it collapsed. But also in ways that were very disturbing. It happened quickly. It happened on volume, on trading, volume that was very high.

[Kate Linebaugh]

Why are markets selling off because of these tariffs?

[Gregory Zuckerman]

Well, there are a few different issues. The first is the fact that free trade has been the backbone of our economy, the global economy, for years. It's benefited many, not everyone, and it's benefited corporations. And they have set themselves up based on this system of free trade. And now corporations around the world are just unsure. They're not even clear. It's not clear to them what they should do to do it. So it's not just the policies. It's the uncertainty about whether they're going to stay, whether they're going to be adjusted or not.

[Kate Linebaugh]

Over the weekend, as you were talking to investors, what were they saying?

[Gregory Zuckerman]

So investors over the weekend were both discouraged and scared, frankly, because they really haven't been able to compare this to anything in their experience. That's what's so confounding to people and bewildering. If they've gone through a crisis before where there's some external cause of the downturn that can be addressed by either the government or the Federal Reserve or both, we've gone through those before. There's a playbook for that. There's really no playbook that can be used for a crisis that's self made in the view of many investors.

[Kate Linebaugh]

Did it seem like Trump was listening to them?

[Gregory Zuckerman]

No. So usually in the middle of a crisis, you get reassuring words, even if they're more words than actions. At least it's somewhat reassuring that the government is on your side, feels our pain is going to work to do everything it can to alleviate the difficulties. In this case, the sense from Donald Trump, from Peter Navarro, from Howard Lotnick was that they weren't concerned whatsoever about the market downturn. If anything, they kind of saw it as a sign that they're having an impact, that they're having the effect that they want. They're looking out for those not in the market rather than those who are.

[Kate Linebaugh]

On Friday, as the markets were about to close, Trump took to social media and said in all caps, quote, only the weak will fail. And then late Sunday, we started to hear people start to speak out.

[Gregory Zuckerman]

Yes, for the first time, we're starting to get pushback from some of the big names on Wall Street.

[Kate Linebaugh]

What that pushback looks like is after this break.

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[Gregory Zuckerman]

Over the weekend, for the first time, Wall street leaders began to express their unhappiness and frankly, a lot of it is self interest. They were losing a lot of money and their clients were. But there's an addition to that. There's more than that. They are just worried, or some of them that I've spoken to worry about our country. They're worried about our future. Some of these people are not losing so much money. They came into this crisis without too much exposure to equities. But they've built careers in this country and they have got kids and they've got future and they know economics and they are bewildered by these decisions that have been made.

[Kate Linebaugh]

Billionaire hedge fund manager Bill Ackman called for a 90 day pause in the tariffs and warned that the alternative would be a self induced economic nuclear winter. Billionaire investor Stanley Druckenmiller also publicly came out against tariffs exceeding 10% on x. Investor Daniel Loeb praised an analysis by the American Enterprise Institute that said Trump's tariff formula makes no economic sense.

[Gregory Zuckerman]

I spoke to a senior investor, one of the most famous people on Wall street, who literally told me, quote unquote, that he's heartbroken. So far, a lot of heavy hitters on Wall street have spoken out. Even those. Many of these individuals were supportive of Donald Trump and the recent election. So that's what is also noteworthy. These aren't people that have had history of criticizing Donald Trump in the administration.

[Kate Linebaugh]

Then this morning, JPMorgan CEO Jamie Dimon spoke out. What did he say?

[Gregory Zuckerman]

So Jamie Dimon is among the few leaders in the financial world that most everyone respects. So when he speaks, people listen. And this morning he came out with his annual statements. It was expected that he would be speaking and he said many things. He was 60 pages of language. But as part of what he said this morning, he had words of caution about tariffs. He didn't say anything out of the norm from Wall Street. Most everybody kind of shares his sentiments. But the fact that Jamie Dimon was going public to express them was noteworthy and newsworthy.

[Kate Linebaugh]

Dimon said the new tariffs will slow down growth and erode America's long term economic alliances. Quote, the quicker this issue is resolved, the. And what are these Wall street leaders asking for? What do they want?

[Gregory Zuckerman]

Many are asking for a pause. They're not necessarily saying don't place tariffs, but they're saying, let's give some time, let's create some room for negotiation. Donald Trump and others, you're unhappy about certain trade policies of other countries. Well, let's give them a chance to address them. And instead we're jumping headlong into a crisis that is, in their view, something that we're creating, which is something they've never seen in their careers.

[Kate Linebaugh]

How has this call been received by the administration?

[Gregory Zuckerman]

It's not clear, frankly. In the past, the last Trump administration was more open to communication from Wall Street. This administration, it doesn't look as highly on Wall Street. Their goal is to help those workers who've been left behind. They've said that. They've been clear about that.

[Kate Linebaugh]

Trump said late Sunday that he doesn't want the market to go down. But, quote, sometimes you have to take medicine to fix something. An administration official said 50 countries reached out over the weekend to negotiate on tariffs. And today Trump said there can be permanent tariffs and there can be negotiations. He also threatened China with an additional 50% tariff. Regardless, the stock market rout has prompted concerns about a bear market. That's when a stock index drops 20% from a recent peak. Do you think we're headed for a bear market?

[Gregory Zuckerman]

It's hard to predict these things. We are close to a bear market, so we're not too far away. Listen, the Trump administration could tomorrow cut a few deals here and there with certain countries and the market will snap back and feel reassured. So it's really hard to predict. But the body language we're getting from Donald Trump and others administration is they are not eager or looking to cut deals. I feel as if Wall street investors and executives to some extent are deluding themselves. They're trying to convince themselves that the administration is more amenable to negotiation than they seem to be.

[Kate Linebaugh]

How long does it take to recover from a bear market?

[Gregory Zuckerman]

So bear markets come and go and investors make money and lose money. And frankly, it's been a long time since we've had difficulty in the markets. We were overdue. That's not really the concern and issue. The real worry is that we maybe have changed the terms of trade, free markets, how stocks and bonds trade going forward. Because even if the Trump administration rolls back some of these tariffs, well, what if they change their minds in six months, in a year and they put them on again? It's going to create uncertainty for the near future.

[Kate Linebaugh]

What does this market sell off mean for everyday Americans?

[Gregory Zuckerman]

Every American to some extent is affected by the market, even if they're not investing in stocks. Obviously there are Those who've got retirements, 401ks, saving for college. They've gotten hurt. But it's more than that. Corporate America right now is uncertain, if not scared. And when executives are unsure, then they don't hire or they cut back on spending and that affects hiring. So I'm worried about employment over the next few months and next year or so. It's not just what this will do to our economy in the United States. It's what it says about the future of free trade capitalism, the role of the United States in global markets as a leader. And even if Donald Trump and company roll back some of these tariffs, the damage has been done. People say investors are worried that it just undermines the free market system as we know it.

[Kate Linebaugh]

After wild swings through the day, the Dow and The S&P 500 fell less than 1% today. The NASDAQ gained slightly. That's all for today. Monday, April 7th. The Journal is a co production of Spotify and the Wall Street Journal. Additional reporting in this episode by Anna Maria Andreotis and Candace Choi. Thanks for listening. See you tomorrow.