The Approval Dip: What Trump's Declining Ratings Mean for Governance and Markets

The Reuters/Ipsos poll released in April 2025 reveals a critical turning point in public sentiment toward President Donald Trump’s second term. His approval rating has plummeted to 42%, its lowest since his return to the White House, marking a steady decline from 47% immediately after his January 20, 2025, inauguration. This drop coincides with aggressive executive actions to expand presidential authority over universities, cultural institutions, and legal norms—a strategy that has sparked widespread unease.

The Power Play and Public Backlash

Trump’s strategy has centered on leveraging executive orders to reshape U.S. institutions. Key points of contention include:
- Freezing $2 billion in federal university funding (57% oppose, including one-third of Republicans).
- Directing cultural institutions like the Smithsonian to purge “improper ideologies” (66% oppose).
- Defying federal court rulings, risking criminal contempt charges over deportation policies (83% affirm presidents must obey courts).

These actions have alienated even segments of his base. The poll underscores a bipartisan rejection of executive overreach, with 59% believing U.S. global credibility is declining and 75% opposing a third term (including 53% of Republicans).

Implications for Governance: A Crossroads

The data suggests Trump faces mounting pressure to moderate his approach. Historically, presidents with approval ratings below 45% often pivot to avoid further erosion of political capital. For markets, this creates a dual scenario:

1. Policy Uncertainty vs. Market Stability
2. If Trump continues aggressive unilateral actions, sectors tied to federal funding (e.g., education, defense) could face volatility.

3. However, public resistance to overreach might force a recalibration, reducing policy risks.

4. Global Perception and Trade
   The 59% of respondents (including Republicans) who say the U.S. is losing global influence could pressure Trump to avoid policies that alienate allies, such as tariffs or immigration crackdowns.

Investment Considerations: Navigating the Crosscurrents

Investors must weigh political dynamics against economic fundamentals. Key sectors to watch:

• Education and Research: Institutions facing funding cuts (e.g., Harvard) or ideological scrutiny could see reduced public investment.
• Legal/Regulatory Sectors: Firms specializing in government compliance or litigation may benefit if executive overreach triggers legal challenges.
• Political Risk Hedging: High approval volatility could boost demand for safe havens like Treasuries or gold.

Conclusion: A Cautionary Equilibrium

The April 2025 poll paints a clear picture: Trump’s approval slump reflects deepening skepticism toward his consolidation of power. With key metrics like immigration approval narrowing to 45% vs. 46% disapproval—a symbolic shift—and third-term opposition at 75%, the political calculus tilts toward moderation.

For markets, this likely means reduced tail risks of extreme policies but persistent uncertainty until governance stabilizes. Investors should prioritize sectors insulated from political volatility while monitoring VIX spikes for signs of broader anxiety. The data underscores a pivotal moment: public pushback has curbed unchecked executive power, but the path forward remains uncertain—a reality that will test both policymakers and markets alike.

In this landscape, caution and diversification reign supreme. As Trump’s administration navigates the backlash, the markets will reward those prepared to parse political signals while anchoring to economic fundamentals.