Donald Trump said on Tuesday in a room full of executives to feel a “renewed spirit” passing through the American corporate world, as companies release hundreds of billions of dollars of investment. “Tarife,” the president added at a meeting of a business round table, “have an extremely positive impact.”
As he spoke, the stock markets made a very different verdict. The S&P 500 index closed 0.8 percent that day and continued to fall in the next few days before bounced on Friday. The index lost 4 percent from the beginning of 2025.
The confidence shook the reverse in the belligerent and unpredictable trade policy of the White House, with the fears that the shabby machinery of the Federal Government would grow.
This is far from the prevailing mood earlier this year, when Trump’s belief that the corporate spirits of animals will be free from deregulation, tax reduction and hacking by many US executives.
IN January, meetings At the World Economic Forum in Davos, Switzerland, he was silent by talking about American domination of sclerotic Europe and stagnating China. “It’s five minutes until midnight for Europe,” one executive director of Top Bank said at the time, adding “everyone in America.
It is a mood rude to Trump’s first weeks in power. The confusing volatility of the president’s creation of policies – as tariffs They threaten, withdrawn, withdrawn, and then re -choose back – raise corporate insecurity, muffled feelings and stimulates the recession warnings.
“In Davos, all the bankers of GLIB spoke about the party’s time, here we are, deregulation, low taxes, M&A flourishing, IPO boom,” says the executive director of a global investor with 200 billion dollars of property in management. “This completely returned on their face.”
The intended slowdown is extraordinary in that it is largely a self-naked wound that he has launched their own administration policiesEconomists say, not a consequence of external shocks such as increasing energy, war, pandemic or banking implosions.
While Trump clearly made it clear during his election campaign that he wanted to double in the trade wars of his first term, his policies proved far wide and more aggressive than most analysts expected.
Trump’s decision to go out swinging while the three most important American trading partners broke out – Canada, Mexico and China – by punishing tariffs during the first two months, has poor investors.
The first Trump administration imposed a charge of imports worth about $ 380 billion in 2018 and 2019. The new tariffs affect the import of $ 1tn, estimates that the Think-Tank Tax Foundation has increased to 1.4 DOTM, assuming exemptions that cover a certain goods from Canada and Mexico.
Corporations say that clarity is missing about what tariffs need to achieve – is it a higher federal income or redistribution of production to the US or specific goals such as a reduction in drug trade or illegal migration? This was still difficult for them to forge plans for them.
This results in an increase in business insecurity and delay in investment decisions, harming growth. A policy uncertainty index among smaller companies composed NfibA non-profit organization representing small businesses, since the early 1970s, is now approaching record heights.
US companies that rely on imports of indirect goods will be affected by higher costs, while US households could find its budgets. Further blow comes because US exporters American shopping partners, such as Canada, EU and China, hit American exporters.
“Everyone started Bullish, but given his policy creating, which at best was unobtrusive, people say that this may not be Trump 1.0,” says David Serra, founder and executive director of the Algebis Investments investment company. “For me in the US -there’s nothing extraordinary. It looks like a circus.”
Adding the impact of trade policy adds a disorder conducted by Elon Musk and its envoys at the so -called Ministry of Government Efficiency (Doge), which chaired the suspension or rejection of tens of thousands of workers and the cancellation of thousands of government gifts and contracts.
Men’s actions launched Razilles within the Republican Party, created a wide uncertainty within the federal labor and anger in parts of the population. Two federal judges on Thursday ordered Trump’s administration for the re-tens of thousands of government employees have been released in recent weeks, in a legal move for Musk cost-up.
While investors started dealing with a danger from American recession, forecasts on Wall Street are not ready to give up the spirit yet. The latest study of forecasts by consensitive economy continues to indicate growth of 2 percent of this year – which is less than a prediction of 2.2 percent a month ago, and the IMF forecast 2.7 percent published in January.
This is still above the growth forecast of 1 percent by IMF for the eurozone. While GDP’s Federal Bank traveler indicates contraction in the first quarter, this is greatly distorted by trade data influenced by the great import of gold.
Scott Beesent, Minister of Finance, played a market volatility and claimed that signs of slower growth were a necessary part of the “detox period” in which the Economy of the Earth became less relying on public consumption.
Some investors are willing to give administration to the benefit of doubt. “In the long run, it will be better for that,” says Joseph Amar, President and CEO of Investment in Capital in New York, Nuberger Bersman’s assets manager. “I don’t think 25 percent of GDP passing through the Government is healthy for any economy.”
But it recognizes a disorder that comes from trade policy. “The speed and scope of the tariffs proposed by the market. The animal spirits were welcomed with reality: it is much easier to reduce consumption than to stimulate growth.”
The leading US companies are The descent of understanding that the tariffs will make them build domestic capacity – despite the president’s aspirations.
The California toy manufacturer Mattel receives about half of the US sales, but Ynon Kreiz, the executive director, says that the tariffs are not enough to incentive to produce production there.
This is despite the efforts of the company in the last six years to diversify its production base – by 2027. No country will provide more than a quarter of its Barbie doll production, hot wheels and other toys cars.
“It’s about the total cost,” Zeiz says in an interview. “We do not see the economy of product production in the US, compared to other countries.”
Kreiz, who attended this week’s meeting of a Business Round Table with Trump in Washington, says moving Mattel’s production sites around one way to compensate for tariffs, but the other is Increase prices for customers. “Ultimately, when it comes to tariff influences, we will alleviate prices to alleviate where we need to do it,” he says.
Men’s manufacturer of electric cars Tesla warned In a letter to the US trade representative Jamieson Gerer that the trade war could make the tariff retaliation and increase the cost of vehicle development in America.
The prospects for growing prices as a result of the increase in tariffs begin to play on consumer minds. The Michigan University Index in March passed another 11 percent in March at 57.9, the higher the fall than the economists expected. The index has now deleted all the gains published after Trump’s election victory in November. “Many consumers have cited a high level of uncertainty about politics and other economic factors,” researchers noted.
Eric York, Vice -President of the Federal Tax Policy in the Tax Foundation, says that the lack of clarification of the Strategy around Trump’s increasing trade war is hanging over the economy. “We hear conflicting goals of Trump’s administration almost daily,” she says.
Trump says his taxes on Canadian and Mexican products are needed to, for example, to comply with the trade of Fentanil and the unfathomable immigration, but he also wants tariffs to force industries like a car to move to the United States and to increase huge quantities of federal revenues to compensate for the impact of tax reduction.
York estimates that the collection will be factor in retaliation by American partners, reducing the level of US GDP by 1 percent compared to previous forecasts. This, he adds, is enough to delete any positive impact from the extension to Trump’s first -born tax reduction.
Considering the odds of liquid chaos, investors are betting that they have offered the story of growth in recent years, the American economy is now losing some of the glows that have been so blinded by delegates to the WeF. “For me, the consensus of Davos is always wrong, but this year I have never seen so many drugs on drugs,” says Serra of Algebris. “It was surreal.”
Moving American expectations renew interest in markets such as Europe, where investors believe that Trump’s capriciousness can trigger a block into action. They indicate a sudden shift of Germany according to investment in defense and infrastructure, and they hope that the EU may also respond by accelerating progress to the long -sought after deepening of the unification of the capital market.
“Some of the initiatives this American administration undertakes can encourage Europe to do some things he is talking about, but they have not done so,” says Amba from Neuberger Berman. There is “the realization that Europe had to encourage growth and invest more in defense.”
In the meantime, recent innovations in China have once again awakened questions about US technological superiority. The appearance of a new AI model from Start-up DeepseekComparable in the abilities with the best models of American leaders such as Openi, Anthropic and Meta, but dressed in radically lower costs and using less sophisticated chips, they have withdrew shares in highly respected American technological companies. China also plans for satellite constellation that could challenge the Starlink Musk System.
Refuses to dollar So far this year, along with the US capital market, it reflects more pessimistic mood. By Friday afternoon, the MSCI USA index decreased by 4.4 percent from the beginning of 2025, as opposed to 7.7 percent of the increase in Europe in Europa in Europa.
“People realize that American exception may not be so exceptional,” said Vincent Mortier, the Chief of Investment in the group, the largest European property manager in Europe. “It’s an awakening call.”
Data visualization by Ray Douglas and Keith Fray
