As of the close of trading yesterday, Tuesday, April 8, the Dow Jones Industrial Average was down 6,322 points, or 15 percent, since January 17, 2025, the last trading day before President Donald Trump took office. The S&P 500 was off 1,078 points, or 18 percent.
For the first time since the 1930s, a market decline this steep is attributable not to growing worries about a recession, a pandemic, or a systemic failure somewhere in the financial marketplace, but to a policy decision. Indeed, a growing chorus of finance titans who either supported President Donald Trump last year, or have at least not yet vocally criticized him, are issuing increasingly dire warnings about the administration’s tariff and trade policy.
For example, over the weekend, billionaire hedge fund investor Bill Ackman, who endorsed President Trump in 2024, acknowledged, “This is not what we voted for,” and warned “the president is losing the confidence of business leaders around the globe” because of the astronomical tariffs his administration has placed on U.S. trading partners. Stan Druckenmiller, an investor and Republican who once was Treasury Secretary Scott Bessent’s employer said on X, “I do not support tariffs exceeding 10 percent.” (As we discuss below, U.S. tariffs are far higher than 10 percent now.)
JPMorgan CEO Jamie Dimon piled on. “The recent tariffs will likely increase inflation and are causing many to consider a greater probability of a recession,” the financier warned in his annual letter to shareholders. Up until that letter, Dimon had not openly criticized the president or his economic priorities. Even Elon Musk is upset with the administration. Yesterday, he called Peter Navarro, President Trump’s top trade adviser and a strong proponent of current U.S. tariff policy, a “moron” who is “dumber than a sack of bricks.”
Ouch.
Is the financial impact of the trade war causing President Trump to lose other important supporters as well, namely Republicans in Congress and Americans who voted for him? And how have trading partners reacted so far? We’ll answer those questions this week, but first, let’s take a look at just how high tariffs are.
How High Are The Trump Tariffs?
The tariff announcement that led to the broad market sell-off over the last several days was only the latest in a long string of White House levies imposed on U.S. trading partners. The Tax Foundation is tracking and evaluating the economic impacts of the Trump tariffs. According to its log, President Trump has imposed:
- A 10 percent blanket tariff on all imports coming into the United States, along with reciprocal penalties on countries that have imposed trade barriers on imports of U.S. goods into their nations. The reciprocal rates range from 11 percent on products from the Democratic Republic of Congo to 50 percent on products from Lesotho, a tiny country in southern Africa. (The reciprocal tariffs went into effect at midnight last night.) The reciprocal tariffs also mean most imports from China will be taxed at 104 percent —that number includes a previous duty on China plus the 34 percent reciprocal tariff announced last week and an extra 50 percent President Trump added since China did not rescind its retaliatory levy on the United States.
- 25 percent tariffs on most products from Canada, Mexico, and China. Energy from Canada is subject to a lower 10 percent penalty. The White House also exempted products compliant with the United States-Mexico-Canada Agreement, the North American trade pact signed during the first Trump administration, from these penalties.
- 25 percent tariffs on steel and aluminum imports from all countries.
- 25 percent tariffs on imports of autos and auto parts from all countries.
- $17 billion in tariffs on imports of copper, along with new penalties on lumber and some agricultural products.
- 25 percent tariffs on semiconductors and pharmaceuticals.
According to CNBC, with the trade penalties announced last week, the new effective tariff rate in the United States is around 20 percent, or about the level set by the Smoot-Hawley Tariff Act of 1930. An estimate from Fitch Ratings predicted the effective tariff rate would hit its highest level since 1909. As CNBC noted, JPMorgan’s chief U.S. economist Michael Feroli came up with similar results. Feroli warned, “A White House official mentioned that other section 232 tariffs (e.g., chips, pharma, critical minerals) are still in the works, so the average effective rate could go even higher.”
As ABC News pointed out, the United States was already experiencing an economic downturn when the Smoot-Hawley tariffs were enacted in 1930, but it is generally believed that the retaliatory tariffs and trade war that resulted from Smoot-Hawley were foundational elements that pushed the United States into the Great Depression.
The Trump tariffs are so high former Federal Reserve Bank of St. Louis President James Bullard warned the president has “dramatically raised the risk of a Smoot-Hawley type outcome.” Americans clearly are worried about a tariff-fueled downturn. Morning Consult’s Index of Consumer Sentiment dropped to 90.6 on April 7, an eight-point swing from April 5, just two days earlier. That drop was the second-largest two-day decline since Morning Consult began tracking consumer sentiment in 2018. The largest decline happened at the onset of the COVID-19 pandemic in March 2020.
A Tariff Too Far? Republicans Are Starting To Abandon The President.
As The Hill reported, seven Republican senators have signed onto a bill over the last week led by Sen. Chuck Grassley (R-Iowa) that would:
- Require the president to notify Congress 48 hours in advance of imposing new tariffs;
- Make tariffs subject to congressional approval after 60 days; and
- Allow Congress to rescind tariffs.
Rep. Don Bacon (R-Neb.) plans to introduce companion legislation in the lower chamber of Congress. According to AXIOS, at least one dozen Republicans are expected to cosponsor that legislation when Rep. Bacon releases it.
On Tuesday, Sen. Grassley argued Congress had delegated “too much” trade authority to the executive branch. He also offered some support for President Trump’s approach, however. “My question to you is: In the medium to the long term, do you plan to turn these tariffs into trade deals to reduce tariffs and nontariff barriers?” Sen. Grassley asked U.S. Trade Representative Jamieson Greer in a hearing. “I support that. On the other hand, if the purpose is to stall on negotiations in order to keep tariffs high for the sole purpose of feeding the U.S. Treasury, I oppose that.”
Republicans are not simply silently signing onto legislation that does not have a chance of becoming law as long as President Trump sits in the Oval Office, either. They are speaking up.
In that hearing yesterday morning with Greer, Sen. Thom Tillis (R-N.C.) asked, “Whose throat do I get to choke if this proves to be wrong?” Sen. Ron Johnson (R-Wis.) told Greer, “I hope you and the president are sensitive to companies potentially going bankrupt by these actions.”
On his own podcast, Sen. Ted Cruz (R-Texas) openly criticized President Trump’s tariffs, insisting they are a tax on U.S. consumers. “I’m seeing a lot of … Republican cheerleaders that are kind of reflectively defending what the White House is doing,” Sen. Cruz said. The conservative from Texas argued the tariffs are “gonna do a lot of harm in the American economy.” Sen. Cruz also revealed that he talked to the head of one of the United States’ top car companies, who predicted the tariffs would raise the average price of a car by $4,500.
Republican voters appear to be siding with Sen. Cruz over the White House on this one. In his weekly newsletter this past Sunday, GOP pollster Bruce Melman provided three charts from an Economist poll that examined how Make America Great Again (MAGA) stalwarts and voters who supported President Trump but do not associate themselves with MAGA have diverged on key economic questions. Mehlman noted that:
- In February, 80 percent of non-MAGA Trump voters said they approved of the president. That number is now down to about 65 percent.
- That same month, 80 percent of non-MAGA Trump voters said they approved of the job the president is doing on jobs and the economy. That number is now slightly lower than 60 percent.
- In February, about 70 percent of non-MAGA Trump voters said they approved of the job the president is doing to combat inflation. That number is now under 50 percent.
How Have U.S. Trading Partners Reacted To Trump’s Tariffs?
Last Friday, the Chinese government announced it will enact a 34 percent tariff on all American imports starting tomorrow, April 10, matching the Trump administration’s reciprocal tariffs rate. As noted above, President Trump reacted by adding even higher tariffs on Chinese products. Then, early this morning, after the United States’ penalties went into effect, China retaliated, imposing a new 84 percent levy on exports from the United States. (For context: The U.S. exports about $145 billion in goods to China a year.)
Other countries are hoping to strike a deal with the president.
President Trump and South Korean President Han Duck-soo held a call earlier this week, and Han has said publicly he wants a deal with the United States and does not plan to enact retaliatory trade penalties. Yesterday, Israel held in-person talks with President Trump. Italian Prime Minister Giorgia Meloni will be in the United States next week to try to work out an agreement, and it appears leaders in Hungary also are open to negotiating. European Union officials announced plans to negotiate with the United States, but also said they would implement countermeasures and new import surveillance.
According to Trump administration officials, more than 50 countries have reached out to open tariff negotiations. “The phone lines are open,” a White House official said.
The White House is hoping that these deals come to fruition before doing more damage to the economy and to GOP support for President Trump. Based on polling and statements from Republican lawmakers like Sen. Cruz, the White House may need to act fast.