TLDR
- President Trump’s first 100 days have seen the S&P 500 drop nearly 8%, marking the worst stock market start for a president since the 1970s
- The White House has explained market losses as part of a “transition period” following tariff implementation
- Treasury Secretary Scott Bessent indicated trade deals with India and South Korea may be announced soon
- Analysts caution these will likely be memorandums of understanding rather than comprehensive trade agreements
- Despite the 90-day pause on some tariffs, sectoral tariffs remain a risk for semiconductors, pharmaceuticals, and other industries
Donald Trump’s return to the White House has coincided with one of the worst stock market performances for a new presidential term in decades. Through Monday’s close, the S&P 500 has fallen almost 8% since his January inauguration, marking the poorest start for investors since the 1970s when Richard Nixon began his second term and Gerald Ford took office.
This market downturn stands in stark contrast to Trump’s campaign promises. He frequently touted the “Trump effect” on stocks, predicting significant upward movement. The reality has been quite different.
The administration has responded to this disconnect with three main explanations. First, they frame the losses as part of a planned “transition period” following tariff implementation. Second, they point to non-tariff factors affecting the market. Third, they occasionally downplay the stock market’s importance.
On April 2, Trump’s “Liberation Day” proclamation introduced steep tariffs that sent markets tumbling. “It’s to be expected,” Trump explained later that day, comparing the economy to “a sick patient that went through an operation on Liberation Day.”
Trade Negotiations and Market Response
The White House has been actively pursuing trade talks with several countries. Treasury Secretary Scott Bessent recently indicated on CNBC that many Asian countries have presented proposals to lower both tariff and non-tariff trade barriers.
India and South Korea appear to be first in line for potential trade announcements. Bessent suggested one of the first deals could be with India, while an “understanding” with South Korea might be unveiled in the coming days.
However, market analysts advise keeping expectations in check. These agreements will likely take the form of bilateral memorandums of understanding rather than comprehensive trade deals, which typically require years to negotiate.
“A lot of what is happening is purchasing countries can do in the short-term to get out of the penalty box, not serious long-term sustainable changes in policies,” explains Myron Brilliant, senior counselor at DBG-Albright Stonebridge Group.
In the case of India, which is less reliant on exports than other Asian nations, pre-emptive exemptions for some U.S. capital goods from tariffs have been implemented. Still, analysts expect little more than a framework for continued discussions.
South Korea faces challenges in reaching a substantial agreement due to political turmoil following President Yoon Suk Yeol’s impeachment. Nevertheless, the country could leverage its position as the world’s second-largest shipbuilder to strike a deal involving liquefied natural gas purchases or shipbuilding partnerships.
The market has shown volatility in response to tariff news. April 9 saw stocks have their best day in years after Trump announced a 90-day pause on reciprocal tariffs for most countries. “We’re having a good day in the stock market,” Trump noted afterward. “There’s a lot of winning out there.”
Yet the broader trend remains negative, particularly on days when tariff policies are emphasized or when Trump criticizes Federal Reserve Chair Jerome Powell, as he did on April 21, calling him “a major loser” amid a market selloff.
Treasury Secretary Bessent has often attributed market declines to “idiosyncratic” factors, particularly in the technology sector. He has referenced DeepSeek, a Chinese artificial intelligence company, when explaining certain selloffs.
The elephant in the room remains U.S.-China relations. The current 145% tariff on Chinese goods makes trade nearly impossible. While most strategists expect this to be reduced, possibly to 50-65%, negotiations appear stalled.
Bessent stated it’s up to China to de-escalate trade tensions. However, analysts suggest China is waiting for clearer signals about the Trump administration’s goals before engaging in high-level talks.
Market participants remain cautious about the weeks ahead. The administration is conducting investigations into semiconductors, pharmaceuticals, lumber, and other sectors that could result in additional tariffs. On May 3, the U.S. could impose 25% tariffs on auto parts, on top of the 25% auto tariff already announced.
“It’s a bit of a head fake,” says Owen Tedford, senior research analyst at Beacon Policy Advisors, regarding the initial trade announcements.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
