The Journal. - Wall Street Speaks Out Against Tariffs

Episode Date: April 7, 2025

Last week, U.S. stocks lost $6.6 trillion in value during a two-day washout after President Trump announced large tariffs on countries around the world. As markets continue to swing, Wall Street leaders are speaking out, including billionaire investor Bill Ackman and JPMorgan Chase executive Jamie Dimon. Host Kate Linebaugh talks with Gregory Zuckerman about the market chaos and how investors are responding.  Further Listening: -Trump’s Tariffs Force a New Era in Global Trade  -Trump 2.0: Trade Wars and Deportation Battles  Sign up for WSJ’s free What’s News newsletter . Learn more about your ad choices. Visit megaphone.fm/adchoices

Since President Trump announced sweeping tariffs last Wednesday, markets around the world have tanked. The Dow plunged more than 2,300 points. S&P sank 322. Nasdaq tumbled 962. Now Asian markets also plunged overnight. U.S. markets losing trillions, over $5 trillion in just a matter of days. European markets are also down about 4.5% across the board.

Economists warn that we'll tip the world's largest economy into a recession here. Carnage, panic, bloodbath doesn't even begin to cut it. Our colleague Gregory Zuckerman has been covering markets for the Wall Street Journal since 1996. This is the most disturbed and discouraged and disheartened I've seen people on Wall Street about policies in Washington, D.C. How many market downturns have you seen? I've seen a lot of crises.

I covered the 1998 long term capital collapse, covered the tech meltdown, I covered 2008 and the housing collapse, the coronavirus crisis. So I've seen a lot of financial crises in my career. How does this one compare? This is unique.

This is the first time one can argue it's been self-inflicted. It's a series of decisions that have resulted in a financial crisis. I've never seen that before. This is the first time I've ever seen government officials create a crisis. And now Wall Street is starting to push back on Trump's tariffs.

Welcome to The Journal, our show about money, business and power. I'm Kate Leimbach. It's Monday, April 7th. Coming up on the show, the tariff, he openly touted his love for tariffs. Then they will pay a very stiff tariff when they send their products into the United States for the privilege of... What were Wall Street executives saying during the campaign? Wall Street executives were a little bit self-delusional, I think, during the campaign.

They heard the talk about tariffs, but they weren't focused on them. They were instead focused on things like lowering taxes, which Donald Trump is still promising, and working on eliminating or weakening regulations. There was a feeling that deals were going to come, M&A, IPOs, other kinds of things that Wall Street executives really prosper and wish for and hope for. So Wall Street investors and executives weren't really as focused on tariffs and the talk about

tariffs as they should have been. Since taking office, Trump has threatened broad tariffs on countries all around the world. He's enacted some, like those on China, Canada and Mexico, and he'd raised the idea of a blanket 10% tariff on all imports. And last Wednesday, on what he called Liberation Day, Trump unveiled a new comprehensive tariff policy. My fellow Americans, this is Liberation Day. Waiting for a long time. April 2nd 2025 will forever be remembered as the day American industry was reborn. Then he brought the details, he shared the details of what would come on top of the 10 percent and

that stunned people. And what was that? Well almost every country was hit with various types of additional tariffs. Reciprocal tariffs. They're called reciprocal. I don't know how they define that, frankly. They use that word reciprocal. But they're really just seizing on the fact that we in the United States have a trade deficit with many countries. And to Donald Trump and others in administration, that is an effective tariff, I think they're saying, but it's not

really a tariff. And as they teach in economics 101, trade deficits aren't necessarily and aren't always because others are cheating us. Sometimes it is as a result of manipulation, be it currency or other kinds of things. But sometimes it's just the fact that the United States is the wealthiest country in the world. So it makes sense that we have a trade deficit with others. We buy more of their goods than they buy of ours. Almost immediately after Trump's announcement, the markets responded.

Yeah, the market did more than fall on Thursday and Friday. It tumbled, it collapsed, but in also in ways that were very disturbing. It happened quickly. It happens on volume, on trading volume that was very high. Why are markets selling off because of these tariffs? Well, there are a few different issues. The first is the fact that free trade has been the backbone of our economy, global economy for years.

It's benefited many, not everyone, and it's benefited corporations. And they have set themselves up based on this system of free trade. And now corporations around the world are just unsure. They're not even clear. It's not clear to them what they should do to do it. So it's not just the policies.

It's the uncertainty about whether they're going to stay, whether they're going to be adjusted or not. Over the weekend, as you were talking to investors, what were they saying? So investors over the weekend were both discouraged and scared, frankly, because they really haven't been able to compare this to anything in their experience. That's what's so confounding to people and bewildering if they've gone through a crisis before, where there's some external cause of the downturn that can be addressed by either the government or the Federal Reserve or both.

We've gone through those before. There's a playbook for that. There's really no playbook that can be used for a crisis that's self-made in the view of many investors. Did it seem like Trump was listening to them? No. So usually in the middle of a crisis, you get reassuring words, even if they're more words than actions, at least it's somewhat reassuring that the government is on your

side, feels our pain, is going to work to do everything it can to alleviate the difficulties. In this case, the sense from Donald Trump, from Peter Navarro, from Howard Lotnick was that they weren't concerned whatsoever about the market downturn. If anything, they kind of start as a sign that they're having an impact, that they're having the effect that they want. They're looking out for those not in the market rather than those who are. On Friday, as the markets were about to close, Trump took to social media and said in all caps, quote, only the weak will fail. And then late Sunday, we started to hear people start to speak out. Yes, for the first time, we're starting to get pushback from some of the big names on Wall Street.

What that pushback looks like is after this break. Over the weekends for the first time, Wall Street leaders began to express their unhappiness. And frankly, a lot of it is self-interest. They were losing a lot of money and their clients were. But there's an addition to that. There's more than that. They are just worried, or some of them that I've spoken to, they're worried about our country.

They're worried about our future. Some of these people are not losing so much money. They came into this crisis without too much exposure to equities, but they've built careers in this country and they have got kids and they've got future and they know economics and they are bewildered by these decisions that have been made. Billionaire hedge fund manager Bill Ackman called for a 90-day pause in the tariffs and warned that the alternative would be a self-induced economic nuclear winter.

Billionaire investor Stanley Druckenmiller also publicly came out against tariffs exceeding 10%. On X, investor Daniel Loeb praised an analysis by the American Enterprise Institute that said Trump's tariff formula makes no economic sense. I spoke to a senior investor, one of the most famous people on Wall Street, who literally told me, quote unquote, that he's heartbroken. So far, a lot of heavy hitters on Wall Street have spoken out, even though many of these individuals were supportive of Donald Trump and the recent election.

So that's what is also noteworthy. These aren't people that have had history of criticizing Donald Trump and the administration. Then this morning, JP Morgan's CEO, Jamie Dimon, spoke out. What did he say? So Jamie Dimon is among the few leaders in the financial world that most everyone respects. So when he speaks, people listen. And this morning he came out with his annual statements. It was expected that he would be speaking and he said many things.

He was 60 pages of language. But as part of what he said this morning, he had words of caution about tariffs. He didn't say anything out of the norm from Wall Street. Most everybody kind of shares his sentiments. But the fact that Jamie Dimon was going public to express them was noteworthy and newsworthy. Dimon said the new tariffs will slow down growth and erode America's long-term economic alliances.

Quote, the quicker this issue is resolved, the better. issue is resolved, the better. And what are these Wall Street leaders asking for? What do they want? Many are asking for a pause. They're not necessarily saying don't place tariffs, but they're saying, let's give some time, let's create some room for negotiation. Donald Trump and others, you're unhappy about certain trade policies of other countries. Well, let's give them a chance to address them. And instead, we're jumping headlong into a crisis that is, in their view, something that we're creating,

which is something they've never seen in their careers. How has this call been received by the administration? It's not clear. Frankly, in the past, the last Trump administration was more open to communication from Wall Street. This administration doesn't look as highly on Wall Street. Their goal is to help those workers who have been left behind. They've said that, they've been clear about that. Trump said late Sunday that he doesn't want the market to go down, but quote, sometimes

you have to take medicine to fix something. An administration official said 50 countries reached out over the weekend to negotiate on tariffs. And today, Trump said there can be permanent tariffs and there can be negotiations. He also threatened China with an additional 50% tariff. Regardless, the stock market route has prompted concerns about a bear market. That's when a stock index drops 20% from a recent peak. Do you think we're headed for a bear market?

It's hard to predict these things. We are close to a bear market, so we're not too far away. Listen, the Trump administration could tomorrow cut a few deals here and there with certain countries and the market will snap back and feel reassured. So it's really hard to predict. But the body language we're getting from Donald Trump and others' administration is they are not eager or looking to cut deals.

I feel as if Wall Street investors and executives to some extent are deluding themselves. They're trying to convince themselves that the administration is more amenable to negotiation than they seem to be. How long does it take to recover from a bear market? So bear markets come and go and investors make money and lose money. And frankly, it's been a long time since we've had difficulty in the markets.

We were overdue. That's not really the concern and issue. The real worry is that we maybe have changed the terms of trade, free markets, how stocks and bonds trade going forward. Because even if the Trump administration rolls back some of these tariffs, well, what if they change their minds in six months, in a year, and they put them on again? It's going to create uncertainty for the near future. What does this market sell off mean for everyday Americans? Every American, to some extent, is affected by the market, even if they're not investing in stocks. Obviously, there are those who've got retirements, 401Ks, saving for college. They've gotten hurt. But it's more than that.

Corporate America right now is uncertain, if not scared. And when executives are unsure, then they don't hire or they cut back on spending and that affects hiring. So I'm worried about employment over the next few months and next year or so. It's not just what this will do to our economy in the United States. It's what it says about the future of free trade, capitalism, the role of the United States in global markets as a leader. And even if Donald Trump and companies roll back some of these tariffs, the damage has been done, people say. Investors are worried that it just undermines the free market system as we know it. the free market system as we know it.

After wild swings through the day, the Dow and the S&P 500 fell less than 1% today. The NASDAQ gained slightly. That's all for today, Monday, April 7th. The Journal is a co-production of Spotify and The Wall Street Journal. Additional reporting in this episode by Anna Maria Andriotis and Candice Choi. Thanks for listening. See you tomorrow.