Financial markets may be the last guardrail on Trump

Since returning to the White House, Donald Trump has ushered in sweeping changes to international geopolitics and US government administration with little regard for norms that have constrained predecessors.

- NINA ISENI

But there has been one source of restraint on a president determined to push the limits of US governance: financial markets.

The stock market’s response to Trump's “Liberation Day” tariff announcement was “probably the most influential force to date” in tempering Trump's policies, said Terrence Guay, professor of international business at Pennsylvania State University.

In just two days, Wall Street equities shredded some $6 trillion in value as the S&P 500 suffered its worst session since the darkest days of Covid-19 in 2020.

“The market does tend to be ... kind of like a seismograph. It reacts to the slightest little tremor,” said Steven Kyle, professor of applied economics at Cornell University.

A week after Trump's announcement of reciprocal tariffs threw markets into turmoil, the Republican suddenly scaled back his plan’s most draconian elements for every country except China. The pivot sent stocks skyrocketing.