Tariffs and Taxes: How Public Sentiment Could Upend Trump’s Trade Strategy—and Your Portfolio

The latest polling data reveals a stark disconnect between President Trump’s rhetoric on trade and the American public’s perception of his policies. A CBS News/YouGov survey finds that 74% of Americans believe Trump’s tariffs primarily benefit the wealthy, while 71% name large corporations as the main beneficiaries. With 57% of the public opposing the tariffs—including a quarter of Republicans—and financial markets reeling, investors must ask: How long can this strategy endure, and what does it mean for portfolios?

Public Perception vs. Policy Outcomes

The CBS poll underscores a deepening skepticism. While Trump’s administration frames tariffs as a tool to “protect American jobs,” only 50% of respondents believe the auto industry would benefit, and fewer than half see gains for the middle class, unions, or small businesses. The numbers are damning: 49% of Americans now feel financially worse off due to tariffs, a 7-point jump in just a month. This shift has hit Trump’s economic approval rating, which has plummeted to 44% approval—the lowest since his 2016 election.

The partisan divide is stark. While 73% of Republicans support the tariffs, 57% of independents and a majority of Democrats oppose them. Even within Trump’s base, 24% of Republicans now disapprove—a worrying sign for a president relying on economic messaging to secure re-election.

Economic Fallout: The Numbers Tell a Story

The Reuters/Ipsos poll adds urgency: 73% of Americans anticipate price hikes from tariffs, with only 4% expecting lower costs. This inflationary pressure could stifle consumer spending, a pillar of U.S. economic growth.

Automakers, for example, face a double whammy. Tariffs on imported steel and aluminum have already driven up production costs, while retaliatory tariffs from China and Mexico have choked export markets. Meanwhile, the S&P 500 has swung wildly, reflecting investor anxiety. A 10% tariff baseline triggered a market “tumble,” followed by a 125% tariff hike on Chinese goods that sent tech stocks into a tailspin.

Political Risks: Approval Ratings and Legislative Backlash

Senator Elizabeth Warren and Representative Jim McGovern have lambasted the tariffs as “a gift to corporations at the expense of workers,” while Republican allies like Markwayne Mullin defend them as “necessary for strength.” But Trump’s net approval rating has sunk to historic lows, with disapproval outpacing approval by 12–19 points in recent polls. This erosion of trust could embolden Democrats to push countermeasures, such as legislation to override tariffs—a move that would destabilize markets further.

Market Implications: Navigating the Storm

Investors should treat tariffs as a dual-edged risk. Sectors like manufacturing and agriculture, which rely on global supply chains, face immediate headwinds. Meanwhile, companies with pricing power—like consumer staples giants Procter & Gamble (PG) or Coca-Cola (KO)—might shield profits by passing costs to consumers.

The bond market is also sending warnings. The yield curve has flattened, a classic recession indicator, while the VIX volatility index spiked to 25 during tariff announcements.

Investment Strategies: Play Defense, Seek Resilience

1. Avoid Tariff-Exposed Sectors: Auto manufacturers, tech firms reliant on Chinese components (e.g., Apple Inc. (AAPL)), and agricultural exporters like Archer-Daniels-Midland (ADM) face near-term pressure.
2. Hedge with Inflation-Proof Assets: Gold (GLD) and Treasury Inflation-Protected Securities (TIPS) could outperform if price hikes accelerate.
3. Focus on Domestic Demand: Retailers catering to lower-income households, such as Dollar General (DG) or Walmart (WMT), may fare better if consumers shift spending patterns.
4. Monitor Political Catalysts: A decline in Trump’s economic approval could pressure lawmakers to act. Track polls and congressional hearings for shifts in policy momentum.

Conclusion: The Tariff Trap’s Unseen Costs

The data is clear: Most Americans—and investors—see tariffs as a zero-sum game favoring the wealthy and corporations, not Main Street. With 49% of households already feeling poorer and markets swinging on every tariff announcement, the risks of prolonged implementation are mounting.

If history is any guide, protectionism often backfires. The Smoot-Hawley Tariff Act of 1930, which triggered a global trade war, worsened the Great Depression. Today’s polls suggest a similar backlash is brewing. Investors ignoring public sentiment do so at their peril. The path forward? Prioritize resilience, diversify globally, and brace for volatility—because when politics and economics collide, the markets rarely forgive.

In the end, the greatest risk isn’t the tariffs themselves—it’s the political and economic instability they’ve unleashed. Stay vigilant.