Dazed and Confused, Markets Brace for Trump’s Second 100 Days: McGeever

The first 100 days of Donald Trump’s second term have been marked by sweeping immigration crackdowns, aggressive tariff policies, and a chaotic approach to global trade—factors that have sent markets into a tailspin and left investors scrambling to decipher the administration’s long-term strategy. Analysts, including Jamie McGeever of Reuters, warn that the combination of economic uncertainty, record trade deficits, and policy unpredictability has created a uniquely fragile environment for investors.

Policy Overhaul and Economic Fallout

The administration’s immigration policies—including a national emergency declaration, militarization of the border, and mass deportation targets—have drawn legal challenges and logistical hurdles. While border encounters fell to record lows, enforcement bottlenecks and detention capacity constraints have delayed deportation goals. Meanwhile, trade policies have been equally disruptive. A series of tariffs—25% on Mexico and Canada, 145% on Chinese imports, and retaliatory measures from trading partners—have sparked a record $162 billion U.S. trade deficit in Q1 2025, up from $130.6 billion in Q4 2024.

These tariffs, coupled with business uncertainty, contributed to a 2.7% GDP contraction in Q1—the worst since the mid-2020 pandemic. The Atlanta Fed’s GDPNow model estimates the economy shrank at a 2.8% annualized rate, driven by a surge in imports as companies stockpiled goods before tariffs took effect.

Market Turbulence and Investor Anxiety

Stock markets have mirrored this economic turmoil. By April 2025, the S&P 500 had fallen 15.6% from its post-election peak, while the Nasdaq dropped over 11%—its worst start to a presidential term since Nixon’s 1973 second term. The market’s volatility, as measured by the CBOE Volatility Index (VIX), spiked to levels last seen during the early days of the pandemic, peaking at 39 before retreating slightly.

McGeever argues that investors are underpricing downside risks, given the administration’s erratic policymaking. “Markets are caught in a tug-of-war between short-term corporate earnings optimism and long-term structural risks from trade wars,” he noted. Forward earnings forecasts for the S&P 500 hit $280 per share in early 2025, yet Truist’s Keith Lerner warned of a potential 10% downside risk to equities unless clarity emerges on trade frameworks.

The Tariff Trap

The administration’s tariff strategy has backfired in multiple ways. Retaliatory measures, such as China’s 125% tariffs on U.S. goods, have disrupted supply chains and raised inflation risks. Consumer sentiment, as measured by the University of Michigan survey, dropped to a 10-year low in March 2025, with fears of sustained inflation above 4% eroding spending power.

Meanwhile, businesses remain frozen in uncertainty. The Institute for Supply Management’s manufacturing and services indices both dipped in Q1, reflecting skittishness over trade policies. Automakers and tech firms, in particular, faced immediate pressure: Ford’s stock fell 12% in early April amid tariff threats, while Apple’s supply chain disruptions pushed its shares down 8% in the quarter.

Recession Odds and Federal Reserve Dynamics

Analysts warn of rising recession risks. Oxford Economics estimates that further tariff escalation could tip the U.S. into recession by mid-2026. The Federal Reserve faces a dilemma: while inflation remains moderate, tariff-driven cost pressures could force a prolonged period of high rates.

“The Fed is stuck between a rock and a hard place,” said U.S. Bank’s Rob Haworth. “Businesses are delaying investments, consumers are holding back, and the administration’s policies are making everything worse.”

Conclusion: A Fragile Balancing Act

The first 100 days of Trump’s second term have left markets in disarray. With a -2.7% GDP contraction, a record trade deficit, and stock declines exceeding 15%, the administration’s policies have created an environment ripe for prolonged volatility. McGeever’s analysis underscores that investors are in a “wait-and-see” mode, but the lack of policy clarity and structural risks from trade wars suggest caution is warranted.

For now, the S&P 500’s 17.6% drop from its February high and the U.S. trade deficit’s 24% QoQ surge highlight the fragility of this recovery. Until the administration signals a coherent trade strategy—or retreats from its tariff-heavy approach—the markets will remain dazed and confused.

In this climate, investors are advised to prioritize defensive sectors, hedge against inflation, and brace for further turbulence as policy uncertainty lingers. The path forward remains anything but clear.