Introduction: Why Wall Street’s Reaction to Donald Trump Still Matters in 2025
Donald Trump was sworn in as the 47th President of the United States.
Since the beginning of his second term, he has been preparing policies that will have a strong impact.
His strict policies have affected more than just politics. Wall Street, the center of global finance, was no exception.
During his first term, President Trump’s relationship with the financial markets was not good. He cut taxes, started a trade war with other countries, and had problems with the Federal Reserve (Fed).
This article will look at how Trump’s policies during his second term, especially in 2025, are likely to affect the U.S. stock market, Treasury yields, and investor sentiment.Treasury yields, and investor sentiment.
The Trump Effect : 2016
Market Rally After 2016 Election
In 2016, when Donald Trump won the U.S. presidential election, markets were uncertain at first. But I soon started feeling hopeful. Investors supported Trump because he promised to:
Tax reform for businesses
Reducing regulations
Growth based on American interests
What happened as a result? The Dow Jones, S&P 500, and NASDAQ all increased in value, beginning what some experts called the “Trump Rally.”
People were doubtful at first, but then the market got better.
November 8, 2016: Donald Trump wins the U.S. presidential election.
The stock market fell at first, but Wall Street changed its strategy quickly. They are now betting on deregulation, tax reform, and infrastructure.
November–December 2016: The “Trump Rally” has begun.
The Dow Jones and S&P 500 have increased significantly because investors expect policies that favor businesses.
Donald Trump’s Pro-Business Agenda : 2017
Tax Cuts and Deregulation
Tax Cuts and Less Regulation Are Good for Wall Street
January 20, 2017: Trump is inaugurated.
Throughout 2017:
There will be big changes to the rules for banking, energy, and healthcare.
Executive orders encourage the development of energy infrastructure and reduce federal oversight.
This happened on December 22, 2017. Trump signs the Tax Cuts and Jobs Act into law.
The corporate tax rate was cut from 35% to 21%.
The stock market is doing really well. This makes Wall Street happy.
The Tax Cuts and Jobs Act of 2017 was the most market-friendly move made by Donald Trump. This law:
The corporate tax rate was cut from 35% to 21%.
Companies started buying back stock.
Corporate earnings went up.
At the same time, Trump’s decision to reduce regulations, especially in finance, energy, and healthcare, was good for Wall Street. Banks like the change.
Trade Wars : 2018
The Most Unpopular Trump Move on Wall Street
Trump’s policies are pro-market, but his trade war with China upset investors. Tariffs on steel, aluminum, and Chinese goods were put into effect:
Market selloffs
Supply chain disruptions
Global trade uncertainty
From 2018 through 2019, Trump’s trade rhetoric caused problems for the S&P 500 and U.S. Treasury yields.
March 2018: Trump put a tax on steel and aluminum.
July 2018: The U.S.-China trade war is getting worse.➤ Markets are reacting with instability. The stock market is down for technology and industrial companies.
Throughout 2018: Even though there are concerns about trade, good economic data is helping to keep stocks strong, even as they become more volatile.
Trump vs. Powell : 2019
Undermining Fed Independence?
Financial institutions are worried about Trump’s repeated attacks on Jerome Powell, the Federal Reserve Chair. Trump:
He accused the Fed of hurting the economy.
He publicly pressured Powell to cut interest rates.
Such interference threatens the perceived independence of the Fed, which Wall Street views as vital to long-term economic stability.
In 2019, Trump often criticized Jerome Powell, the Chairman of the Federal Reserve.
They publicly demand rate cuts to stimulate growth.
Tweets that criticize the Fed cause problems in the financial markets.
In December 2019, the “Phase One” trade deal with China was reached. As a result, stocks soared to new heights, as fears about trade eased.
COVID-19 Crisis : 2020
Market Stimulus During COVID-19: Trump Delivers Relief and Response
During the 2020 pandemic, Trump supported significant financial aid through the CARES Act. This included:
The government gave money straight to people, helped businesses keep their employees by giving them money, and gave money to companies that were having problems. People who work on Wall Street were happy about this, and it helped the markets get better quickly.
February–March 2020: Markets crash amid global pandemic.
March 27, 2020: Trump signs the CARES Act, a $2.2 trillion stimulus package. This act includes direct checks, corporate relief, and unemployment benefits.
Throughout 2020:
The stock market is doing better because of government support and actions by the Federal Reserve.
Trump says the market is getting better, even though a lot of people are out of work.
Power Transition and Wall Street Moves : 2021
Election disputes, fueling the Capitol riot.
With the huge political problem of the Capitol riot and the legal risks from election disputes, Wall Street quickly focuses on the new president and moves away from Donald Trump.
The actions that led to the Capitol riot made many supporters leave him. This made it easier for Wall Street to distance itself from Trump.
January 6, 2021: Political instability worsens with the Capitol riot.
January 20, 2021: Joe Biden is inaugurated as president. Trump is leaving office, and Wall Street is paying attention to Biden’s financial plans and his ideas for green energy.
Trump’s Political Comeback : 2024
November 2024: Trump wins the presidential election for a second term, but not consecutively. Wall Street is cautious. The market’s initial growth slows down as there is more uncertainty about trade and monetary policy.
Trump 2.0 : 2025
Tariffs, Federal Reserve Tensions, and How the Market Responds
In his 2025 return, President Trump has caused people to worry again about the economy.
New tariff announcements caused the bond market to sell off.
A public disagreement with Powell could hurt the Fed’s credibility.
Wall Street is worried about Trump’s unpredictability.
Even though there are some positive signs, many investors are worried about what Trump’s next step will mean for interest rates, inflation, and stock prices.
January 2025: Trump is sworn in for his second term as president.
April 2, 2025: It announced a new “Liberation Day” tariff that will affect almost all imports.
First, bond yields go down (people want to invest in safe options). Then, they go up because of worries about the economy.
April 9, 2025: Trump says there will be a 90-day pause on tariffs (except for those from China).
Stocks are doing well, but the bond market is still worried.
April 17, 2025: Trump hints at removing Fed Chair Powell.
Financial markets are unstable. Bond yields have increased because people are worried about the Federal Reserve’s independence.
April 22, 2025: Trump says he doesn’t plan to fire Powell.
The markets have become a little more stable, but people are still worried.
Donald Trump and Wall Street
A Love-Hate Relationship
To sum it up, Wall Street’s relationship with Donald Trump is full of conflict:
Good for the markets, bad for the markets.
Tax cuts and fewer regulations, trade wars and tariffs.
The Fed is interfering with the economy.
Crisis and political uncertainty.
Trump’s policies might make the stock market go up in the short term, but they often make the economy less stable in the long term because he changes his political position often. For investors, this means one thing: expect market ups and downs.
Donald Trump’s impact on the economy has been extreme. Stock prices have surged to record highs, driven by tax cuts, but the market has also experienced significant drops due to trade and institutional tensions. Wall Street often took advantage of Trump’s policies to make money quickly, but they were careful about how his unpredictable decisions might affect the long-term.
Is the crypto-friendly stance also a crackdown on Wall Street?
Maybe his strong support for cryptocurrency is part of his plan to reduce Wall Street’s influence. But it’s hard to know what he really wants because he’s already caused a lot of problems where he has a conflict of interest. Also, as his attacks on Wall Street get stronger, the prestige of the presidency itself is slowly disappearing. This could be seen as a harmful pattern of behavior.
The MAGA slogan is about regaining economic and political power. What will be the outcome of all these actions? We’ll have to wait and see.