Trump Tariffs: Wall Street's Five Stages of Grief

As Wall Street heads into a new quarter, the market is grappling with the emotional rollercoaster of President Donald Trump’s tariffs. The uncertainty surrounding these tariffs has put investors through the five stages of grief: denial, anger, bargaining, depression, and acceptance. Let’s explore how these stages are playing out in the market.



Denial: The Initial Shock

The first stage of grief is denial, and Wall Street is no stranger to this. When Trump first announced his tariff proposals, many investors refused to believe the impact it would have on the market. The S&P 500 index was at record highs, and some strategists questioned how much room was left to rally. The market was in a state of denial, hoping that the tariffs would be a temporary blip rather than a long-term threat.

Anger: The Market’s Frustration

As the reality of the tariffs set in, the market moved into the anger stage. Investors were frustrated with the lack of clarity and the potential impact on their portfolios. The S&P 500 index is down 4.6% for the year, its worst start since 2022. The tech-heavy Nasdaq is down 10.4% this year, posting its worst quarter since June 2022 and worst start to a year since 2020. The market’s anger is palpable, with sharp drops in the morning followed by recoveries in the afternoon.

Bargaining: Seeking Clarity

In the bargaining stage, investors are seeking clarity and trying to make sense of the situation. They are looking for any sign that the tariffs might be less severe than initially thought. For instance, on April 4, 2025, the S&P 500 briefly reentered correction territory, dropping to its lowest level since September before rebounding into the green in the afternoon. This pattern of sharp drops followed by recoveries is a clear sign of the market’s bargaining phase.

Depression: The Market’s Pessimism

The depression stage is characterized by a sense of hopelessness and pessimism. The market is grappling with the potential long-term effects of the tariffs, including inflation and economic growth. Economists anticipate that the sweeping tariffs could spur inflation and drag on economic growth, which could lead to a growing risk of a recession. Goldman Sachs has increased its estimate of the chance of a recession in the next 12 months to 35% from 20% previously. This heightened uncertainty and potential for economic downturn has led to a more pessimistic investor sentiment.

Acceptance: Preparing for the Future

The final stage of grief is acceptance, where investors come to terms with the new reality and start preparing for the future. The market is beginning to accept that the tariffs are here to stay and is looking for ways to adapt. For instance, the yield on the 10-year Treasury note fell to an intraday low of 4.2% as investors snapped up bonds before settling around 4.24%, slightly below its previous close, as stocks rallied. This is a sign that the market is starting to accept the new reality and is looking for ways to hedge against the potential risks.



In conclusion, Trump’s tariffs have put Wall Street through the five stages of grief. The market is grappling with the uncertainty and potential long-term effects of the tariffs, but it is also beginning to adapt and prepare for the future. As the market moves through these stages, it is important for investors to stay informed and make strategic decisions to navigate the challenges ahead.