1. Introduction

1.1 Background and Purpose

In the interconnected global economy and financial markets, the series of policy measures implemented during President Trump’s tenure became key variables influencing the direction of the U.S. and global economies. With his unique political style and economic ideas, Trump implemented a range of policies, including tax reform, trade protection, and financial regulatory adjustments. These policies not only sparked widespread discussion and impact within the U.S. but also created waves on the international economic stage.

As a major indicator of the global economy, the U.S. stock market showed high sensitivity to the policy adjustments of the Trump administration. Stock market fluctuations not only reflect the market’s immediate reaction to policies but also encapsulate expectations for the future direction of the U.S. economy. For instance, the large-scale tax reform policy implemented at the end of 2017 stimulated a short-term rally in the stock market, as increased corporate profit expectations boosted investor confidence. However, his protectionist trade policies, such as imposing tariffs on multiple countries, sparked concerns about the escalation of global trade tensions, causing noticeable volatility in the stock market.

2. Overview of Major Policies During Trump’s Administration

During Trump’s presidency, a series of distinctive policies were implemented, which had a profound impact on the U.S. economy and the stock market. Among these, tariff policies and other economic measures played an important role in stimulating the economy and adjusting industrial structures, while also bringing significant uncertainties and challenges.

2.1 Tariff Policies

After taking office, Trump actively pursued trade protectionism to achieve his “America First” agenda, with his tariff policies becoming a core component of his economic strategy. In 2018, citing national security concerns, the Trump administration imposed a 25% tariff on imported steel and a 10% tariff on imported aluminum, drawing widespread attention and strong reactions worldwide. Many countries condemned the U.S. for disrupting the international trade order and damaging the stability of the global economy.

Subsequently, the Trump administration continued to escalate tariff adjustments, imposing high tariffs on goods imported from China, the European Union, and other regions. In July 2018, the U.S. imposed a 25% tariff on $34 billion worth of Chinese goods, and China quickly retaliated with tariffs on an equivalent amount of U.S. products, marking the beginning of the U.S.-China trade conflict. Over the next months, both sides repeatedly imposed tariffs on each other, with the range of affected products expanding, and trade tensions escalating. By September 2019, the U.S. imposed a 10% tariff on about $300 billion worth of Chinese imports, with the tax rate on approximately $125 billion worth of goods increasing to 15% by December 2019.

In his second term, Trump’s tariff policies became even more aggressive. In January 2025, he signed an executive order imposing a 25% tariff on imports from Mexico and Canada, with a 10% tariff on Canadian energy products and an additional 10% tariff on China. These actions aimed to protect U.S. domestic industries, reduce the trade deficit, and bring manufacturing back to the U.S. However, the implementation of these policies not only triggered strong dissatisfaction and retaliatory measures from trade partners but also imposed a heavy burden on relevant U.S. industries and consumers.

2.2 Other Economic Policies

During Trump’s administration, immigration policy became one of the focal points of attention. He advocated for strict limitations on immigration, significantly reducing the approval rate of immigration applications, and planned to deport illegal immigrants, restart the construction of the U.S.-Mexico “border wall,” and use advanced technology to monitor the border. Although Trump supported relaxing policies for technical immigrants, allowing foreign graduates from U.S. universities to obtain green cards, overall, his policies marked a clear trend of tightening immigration. The implementation of these policies had various impacts on the U.S. economy and labor market. On the positive side, reducing the influx of low-skilled immigrants somewhat eased competition in the domestic labor market, potentially providing local low-skilled workers with better job opportunities and wage increases. However, on the negative side, the mass deportation of illegal immigrants and the reduction in immigration numbers led to labor shortages in certain U.S. industries, such as agriculture and construction. These industries have long relied on immigrant labor, and the reduction in immigration forced companies to raise wages to attract workers, thereby increasing production costs and hindering industry development.

In terms of fiscal spending, Trump announced a large-scale tax reform centered on tax cuts, providing tax relief for businesses by reducing the corporate tax rate from 21% to 15%. This move aimed to ease the burden on businesses, stimulate investment, and promote economic growth. At the same time, the Republican Party’s 2024 platform stated the intent to make Trump’s tax reform permanent, eliminate the “tip tax” on restaurant and hotel workers, and cut unnecessary government spending to reduce fiscal pressure. In the infrastructure sector, Trump advocated for increased investment to improve U.S. infrastructure and promote sustainable economic development. These fiscal policies had complex effects on the U.S. economy. In the short term, the tax cuts increased the disposable income of businesses, improving their profitability and stimulating investment and expansion, thus contributing to economic growth. However, the tax cuts also exacerbated fiscal deficits and increased government debt. If fiscal deficits remain high over the long term, it could lead to inflation, a debt crisis, and other economic issues, posing a threat to the long-term stability of the economy.

3. Trump’s Policies and Their Short-term Impact on the U.S. Stock Market

3.1 Tariff Policy Triggers Significant Stock Market Volatility

Trump’s tariff policies were like a stone thrown into a calm lake, causing massive ripples in the U.S. stock market. In March 2018, when Trump announced tariffs on imported steel and aluminum products, the stock market reacted sharply. On March 22, the Dow Jones Industrial Average fell by 724.42 points, a drop of 2.93%, the S&P 500 index dropped by 3.29%, and the Nasdaq Composite Index fell by 3.80%. This policy sparked concerns about a global trade war, and investors quickly sold off stocks, leading to a significant market decline.
As the trade tensions between the U.S. and China escalated, stock market volatility increased. On July 6, 2018, the U.S. imposed a 25% tariff on $34 billion worth of Chinese goods, and the stock market responded negatively. The Dow Jones Industrial Average dropped by 255.99 points, or 1.00%, the S&P 500 index dropped by 1.17%, and the Nasdaq Composite Index fell by 1.40%. Each subsequent tariff adjustment led to more significant stock market fluctuations. On May 6, 2019, when the U.S. announced an increase in tariffs on $200 billion worth of Chinese imports from 10% to 25%, the stock market again plunged. The Dow Jones Industrial Average fell by 617.38 points, or 2.38%, the S&P 500 index dropped by 2.41%, and the Nasdaq Composite Index fell by 3.02%.
In his second term, Trump’s more aggressive tariff policies had an even more significant impact on the stock market. In January 2025, he signed an executive order imposing a 25% tariff on imports from Mexico and Canada, and a 10% tariff on Chinese goods. This announcement led to a sharp decline in the stock market, with the Dow Jones Industrial Average falling by 1,024.56 points, or 2.84%, on January 15. The S&P 500 index dropped by 3.24%, and the Nasdaq Composite Index fell by 3.80%. On April 2, 2025, Trump announced a 10% “minimum baseline tariff” on all trade partners, with higher tariffs on dozens of other countries, including China. This move triggered concerns about a global economic recession, and the U.S. stock market suffered a “bloodbath.” On April 3, the Dow Jones Industrial Average fell by 1,679.39 points, or 3.98%, to 40,545.93 points, marking the largest single-day drop since June 2020; the S&P 500 index dropped by 4.84%, and the Nasdaq fell by 5.97%, marking the largest drop since March 2020. In the following trading days, the market continued to plummet, and the S&P 500 index lost trillions of dollars in value in a short period, spreading panic among investors.

3.2 Other Policies’ Short-term Impact on the Stock Market

Trump’s immigration policy also had a certain impact on the stock market in the short term. In January 2017, when Trump signed the new immigration policy, it triggered panic in the stock market. On January 30, the Dow Jones index fell by 0.61%, marking the largest single-day drop since October 11, 2016. The Nasdaq and S&P 500 indexes also saw their biggest drops of the year. The uncertainty surrounding this policy led to concerns about the future growth prospects of the U.S. economy, and investor confidence was shaken.
In terms of fiscal policy, Trump’s tax cut plan provided some short-term support to the stock market. In late 2017, Trump signed a large-scale tax reform bill, reducing the corporate tax rate and increasing businesses’ disposable income, which boosted corporate profit expectations. This news contributed to a strong rally in the stock market in early 2018. The Dow Jones Industrial Average rose by 5.77% in January 2018, the S&P 500 index increased by 5.65%, and the Nasdaq Composite Index gained 7.35%. Investors were optimistic about corporate earnings growth, leading to a strong market performance. However, the Trump administration’s plans to cut government spending raised concerns among investors. If the government significantly reduced spending, it could negatively affect industries that depend on government contracts, such as defense, military, and infrastructure sectors. Stocks in these sectors often fell when market expectations of government spending cuts grew. For example, in 2025, when news emerged that the Trump administration might significantly reduce infrastructure spending, construction-related stocks dropped, and the share prices of related companies were heavily impacted.

4. Long-Term Impact of Trump’s Policies on U.S. Stocks

4.1 Long-Term Effects of Economic Structural Changes on U.S. Stocks

Trump’s tariff policies had a profound impact on the U.S. economic structure, which, in turn, influenced the long-term trajectory of U.S. stocks. In the long run, tariffs led to increased costs for U.S. companies, particularly those reliant on imported raw materials and components. For example, the U.S. automobile industry, which imports large quantities of parts from abroad, saw a significant increase in production costs due to tariffs. Statistics show that by 2025, production costs in the U.S. automotive industry rose by about 15% due to the tariffs, which directly squeezed profit margins. In response to rising costs, companies were forced to raise product prices, reduce production scale, or lower wages. These measures not only impacted the competitiveness of these companies but also negatively affected the U.S. labor market and consumer confidence.

From an industrial structural adjustment perspective, Trump sought to use tariff policies to encourage the return of manufacturing to the U.S., aiming for the country’s re-industrialization. However, the reality was that the return of manufacturing faced numerous challenges. On one hand, domestic labor costs in the U.S. are relatively high, and there is a lack of skilled workers, making it difficult for manufacturing companies to maintain cost advantages after returning to the U.S. On the other hand, global supply chains have already formed high levels of specialization and collaboration, and reconstructing supply chains in the U.S. would require significant investments of both time and money. For instance, while Apple indicated it was considering relocating part of its production back to the U.S. under pressure from the government, it faced numerous challenges due to the lack of a complete electronic components supply chain in the country. These difficulties in reshoring manufacturing delayed the pace of structural adjustments in the U.S. economy, thereby weakening economic growth momentum.

In terms of corporate profits, tariff policies have squeezed the overseas market shares of many U.S. companies. Take the technology sector as an example: U.S. tech companies, which hold significant positions in global markets, have faced higher trade barriers and costs due to tariff-induced trade tensions, leading to a decline in the price competitiveness of their products abroad. According to market research, between 2024 and 2025, sales of U.S. tech companies in the Asian market decreased by approximately 20%, directly affecting corporate profitability. The decline in corporate profits inevitably reflects in stock prices, suppressing the long-term performance of tech stocks.

4.2 Changes in Market Confidence and Investor Expectations

Investor confidence in the long-term outlook for U.S. stocks has been significantly altered by Trump’s policies. The uncertainty surrounding Trump’s policies, particularly the frequent adjustments to tariff policies, made investors uncertain about the future direction of the U.S. economy. Investors were concerned that the escalation of trade tensions would lead to a global economic recession, which would, in turn, affect U.S. corporate profits and stock market performance. This concern led to a reduction in investors’ risk appetite, causing them to increasingly move their capital into safer and more stable assets such as bonds and gold.

According to data from the U.S. Investment Association, since Trump’s second term began in 2024, the amount of funds withdrawn from the U.S. stock market has reached hundreds of billions of dollars, with investors redirecting capital into the bond market. In the first quarter of 2025, capital inflows into the U.S. bond market increased by 30% year-on-year, while funds flowing out of the stock market grew by 25% year-on-year. This indicates a decline in investor confidence in U.S. stocks, with investors adjusting their strategies accordingly.

In terms of investment strategy adjustments, investors have placed more emphasis on asset diversification and risk mitigation. Many investors have started to increase their allocation to emerging market stocks and commodities, reducing their dependence on U.S. stocks. At the same time, investors have become more focused on the fundamentals and risk resilience of companies, favoring those with stable cash flows, low debt levels, and strong competitiveness. For example, some investors have increased their investments in the consumer staples sector, as these industries are relatively less affected by economic cycles and trade tensions, offering greater stability. Additionally, investors have started paying more attention to investment opportunities in emerging fields such as environmental protection and renewable energy, seeing these areas as having significant growth potential and long-term investment value.

5. In-Depth Analysis of Typical Cases

5.1 Apple Inc.’s Impact from Tariff Policies

Apple, as a global giant in the tech industry, was significantly impacted by Trump’s tariff policies. Apple’s production is highly dependent on the global supply chain, with its component suppliers located around the world, including in countries like China, South Korea, and Japan. For example, the display screens for iPhones are primarily provided by South Korea’s Samsung and LG, while chips are mainly produced by Taiwan’s TSMC, and the final assembly is largely done in China.

Trump’s tariff policies led to a substantial increase in Apple’s production costs. In April 2025, Trump announced high tariffs on goods imported from China and other countries, which directly increased the tariff costs on components and products imported by Apple. For instance, because most of the assembly work for iPhones is done in China before being imported to the U.S., the increase in tariffs added about $100–150 to the cost of each iPhone. In response to these rising costs, Apple had to adopt a series of measures. On one hand, Apple tried to negotiate with suppliers to lower the component procurement prices, but due to the rising costs faced by suppliers, this measure had limited success. On the other hand, Apple considered shifting some production lines to other countries such as India and Vietnam to avoid tariff risks. However, these countries still faced significant gaps in infrastructure and labor quality compared to China, and relocating production lines posed many difficulties and challenges, which further increased Apple’s operating costs.

The tariff policies had a clear negative impact on Apple’s profits. With rising costs, Apple’s profit margins were significantly squeezed, even though product prices remained unchanged. According to Apple’s Q2 2025 financial report, the company’s net profit decreased by 18% year-over-year, primarily due to the increased tariff costs. If Apple chose to pass on the costs to consumers by raising product prices, it could lead to a decline in sales, further affecting profits. For example, market research institutions predicted that if Apple raised iPhone prices by 10% to offset the tariff costs, sales in the U.S. market could drop by 15%–20%.

In terms of stock price performance, Apple’s stock also experienced significant volatility due to the tariff policies. On April 3, 2025, after Trump announced the “reciprocal tariff” policy, Apple’s stock dropped by 9.25%, closing at $203.19, with a market value reduction of more than $310 billion in one day. Subsequently, Apple’s stock continued to decline in the short term. From April 3 to April 9, the stock dropped by about 23%, and its market value evaporated by about $770 billion. Although Apple took a series of measures to cope with the impact of the tariff policies, such as negotiating with suppliers and adjusting its production lines, the market’s earnings expectations for Apple remained pessimistic, causing its stock price to stay depressed for a prolonged period.

5.2 Tesla’s Development and Stock Price Volatility Under Trump’s Policies

As a leader in the electric vehicle industry, Tesla’s development and stock performance experienced complex changes under the policy environment during Trump’s presidency. Trump’s tariff policies had a multifaceted impact on Tesla’s production and market.

In terms of production, Tesla’s car manufacturing relies on a global supply chain, with many components imported from abroad. Trump’s tariffs on imported auto parts significantly increased Tesla’s production costs. For example, the battery components Tesla imports from China and electric motors imported from Germany saw a 15%–20% increase in procurement costs due to the tariffs. In response to rising costs, Tesla had to consider adjusting its supply chain layout, seeking alternative suppliers, or setting up more domestic parts production facilities. However, this process required substantial financial investment and faced challenges such as technology transfer and supply chain integration, making it difficult to effectively control costs in the short term.

In terms of the market, Trump’s tariff policies triggered global trade frictions, hindering Tesla’s expansion into overseas markets. Tesla has a broad customer base in Europe and Asia, but the trade frictions led to higher tariffs on U.S. cars in these markets, reducing the price competitiveness of Tesla vehicles. For instance, after the EU imposed tariffs on U.S. cars, the price of Tesla Model 3 in the European market rose by about €5,000, which significantly impacted its sales. In Q1 2025, Tesla’s sales in Europe dropped by 25% year-over-year.

Tesla’s stock also experienced significant volatility due to Trump’s policies. In November 2024, after Trump won the election, the market had relatively optimistic expectations for his policies, and Tesla’s stock rose. However, as Trump’s policies, especially tariff measures, were implemented, Tesla’s stock began to decline. In January 2025, after Trump signed an executive order imposing a 25% tariff on products imported from Mexico and Canada, and a 10% tariff on imports from China, Tesla’s stock sharply dropped. On January 15, the stock fell by 8.56%. On April 2, 2025, Trump announced a 10% “minimum baseline tariff” on all trade partners, and higher tariffs on several other countries and regions, including China. This move sparked concerns about a global economic recession, and Tesla’s stock experienced a significant “bloodbath.” On April 3, Tesla’s stock dropped by 12.45%, marking the largest single-day drop in years. In the following trading days, Tesla’s stock continued to decline, with its market value shrinking significantly.

Despite actively taking measures to cope with the challenges posed by Trump’s policies, such as increasing domestic production investments and expanding the domestic market, the uncertainty of the policies continued to affect Tesla’s development and stock performance.

6. Market Reactions and Perspectives

6.1 Wall Street Analysts’ Views and Forecasts

Wall Street analysts have differing views on the U.S. stock market’s outlook under Trump’s policies, leading to a vigorous debate between bullish and bearish camps. Some optimistic analysts believe that Trump’s tax cuts and deregulation policies will release more profit potential for businesses, thus driving the U.S. stock market higher. For example, analysts at Goldman Sachs pointed out in a report that Trump’s tax cuts could increase the earnings of S&P 500 constituent companies by up to 20% in the next two years. They argue that the reduction in corporate tax rates will directly boost net profits, providing companies with more funds for research and development, expansion, and dividends, which will attract more investors to buy stocks and drive prices up.

On the other hand, analysts with a more pessimistic outlook are concerned about Trump’s tariff policies, arguing that they will trigger a global trade war and negatively affect U.S. companies’ profits and the long-term trajectory of the U.S. stock market. Brett Ryan, a senior U.S. economist at Deutsche Bank, stated after Trump’s announcement of the latest tariff plan that the tariffs would likely be worse than expected, with the overall real tariff rate on all U.S. imports set to be between 25% and 30%, significantly increasing the risk of an economic recession. Evercore ISI’s strategists also released a report indicating that the announced tariff plan would raise the U.S.’s real tariff rate to 29%, the highest level in over a century. They are concerned that higher tariffs will increase costs for U.S. businesses, reduce market share abroad, and lower corporate profits, ultimately leading to a major correction in the stock market.

Some analysts believe that the uncertainty surrounding Trump’s policies will increase market volatility, but the long-term trend will still depend on the fundamentals of the U.S. economy. Juan Correa, a strategist at BCA Research, pointed out that the economic backdrop at the beginning of Trump’s second term was vastly different from his first. With U.S. inflation rates and interest rates both declining and global economic growth seemingly slowing, investors’ enthusiasm for the “Trump trade” seems misguided. He advised investors to adopt a defensive strategy, selling stocks and buying bonds.

6.2 Changes in Investor Behavior and Market Sentiment

Under Trump’s policies, investor behavior has changed significantly, and market sentiment has experienced extreme fluctuations. When Trump announced large-scale tax cuts, investors’ expectations for corporate earnings growth rose sharply, and market sentiment became optimistic, with large inflows of capital into the stock market. After the signing of the tax reform bill at the end of 2017, the U.S. stock market saw a rally, with investors increasing their stock allocations and stock funds seeing significant inflows.

However, Trump’s tariff policies triggered panic in the market, and investors began to reassess risks. As trade tensions escalated, investors grew concerned that a global economic downturn would affect U.S. companies’ earnings, prompting a sell-off in stocks and a shift towards safer assets. In April 2025, when Trump announced a 10% “minimum baseline tariff” on all trade partners and imposed higher tariffs on dozens of other countries, including China, U.S. stocks underwent a sharp sell-off, and the market panic index (VIX) spiked significantly. According to statistics, within a week of the tariff announcement, the U.S. stock market saw capital outflows of billions of dollars, with investors moving funds into safer assets such as bonds and gold.

In terms of investment strategy, investors became more focused on asset diversification and risk management. Many investors began increasing their allocations to emerging market stocks and commodities to reduce their reliance on U.S. stocks. At the same time, investors paid more attention to companies’ fundamentals and risk resilience, favoring investments in companies with stable cash flow, low debt levels, and strong competitive positions. For example, some investors started increasing their investments in consumer staples sectors, as these industries are less affected by economic cycles and trade tensions, making them more stable. Additionally, investors began to explore opportunities in emerging sectors such as environmental protection and renewable energy, believing that these areas have significant development potential and long-term investment value.

Conclusion

In the long term, the changes in the U.S. economy driven by Trump’s policies have had a lasting impact on the stock market. The tariff policies have led to increased costs for U.S. businesses, disrupted global supply chains, and squeezed corporate profits, putting pressure on the long-term performance of the U.S. stock market. At the same time, changes in market confidence and investor expectations have also played a significant role in influencing the U.S. stock market. The uncertainty surrounding Trump’s policies has caused investors to become concerned about the long-term outlook for U.S. stocks, leading to a decrease in risk appetite and a shift of capital out of the U.S. stock market towards safer, more stable assets.