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Tariffs, Tokens, and Turmoil: The Market Fallout from Trump’s Policy Uncertainty
By David Krause
This paper investigates the financial consequences of economic policy shifts following President Trump’s second inauguration in January 2025. Using empirical data from April 2024 through April 7, 2025, this study assesses asset performance across U.S. equities, cryptocurrencies, gold, and bonds. The administration’s aggressive trade protectionism, ambiguous digital asset directives, and deregulatory approach to artificial intelligence have triggered heightened market volatility, diminished investor confidence, and a rotation toward defensive assets. Indexed returns reveal that traditional safe havens like gold outperformed riskier assets, while the Magnificent Seven equities and cryptocurrencies have experienced sharp post-inauguration drawdowns. The findings highlight the destabilizing role of policy uncertainty in capital markets, raising critical concerns for investors and policymakers regarding the repricing of political risk. This paper concludes that inconsistent economic governance is contributing to systemic fragility and recommends a more coherent regulatory approach to restore investor trust and improve market efficiency.
Source SSRN
