Wall Street thought Trump was one of them. Wrong!

President Donald Trump’s decision to hit America’s trading partners with sweeping and clumsily designed tariffs is forcing investors to reassess their shared belief that his second term would be positive for financial assets and the economy. Hearing money managers try to rationalize this unravelling reveals a lot about how Wall Street got Trump so wrong.

While the president’s populist tendencies and extreme views on trade were known risks, his wealthy backers were more focused on his promises to cut taxes and regulations. The inclusion of several billionaires in his administration instilled confidence he’d do little to jeopardize their stock market portfolios. Yet buoyed by his resounding election victory and surviving an assassination attempt, Trump seems willing to countenance a recession and higher inflation to bring manufacturing jobs back to the US.

The few moderating voices in his administration and the stock market’s very negative assessment of his actions have been ignored, leaving the S&P 500 on the cusp of bear market; the risk of corporate defaults is rising, hedge funds are being hit with margin calls and initial public offerings have been put on ice.


The corporate executives, hedge fund managers and venture capitalists who embraced Trump are thus experiencing something resembling the five stages of grief: denial, anger, bargaining, depression and acceptance.

For some, the president remains a dealmaker extraordinaire who deliberately went big on tariffs to force trading partners to negotiate; the administration’s boast that more than 50 countries have reached out seeking talks shows the strategy is working and will pay off in the long term. But this view is belied by the tariffs’ amateurish communication and design: imposing the highest tariffs on countries with the largest trade surpluses makes no sense.

As Trump digs in and refuses to concede a mistake, his wealthy supporters’ previous reluctance to criticize the administration for fear of retribution is starting to fray. Billionaire hedge fund manager and staunch Trump supporter Bill Ackman’s initial response to the tariffs was fairly sanguine: the “more that markets support the president and his strategy, the higher probability that he succeeds, so a stable hand on the trading wheel is a patriotic one,” he wrote on X.

But urging investors to rally behind the president out of a sense of duty was sheer fantasy; within days, the Pershing Square founder had changed his tune, calling the scale of the tariffs a “mistake.” “The president is losing the confidence of business leaders around the globe,” Ackman said. “The consequences for our country and the millions of our citizens who have supported the president — in particular low-income consumers who are already under a huge amount of economic stress — are going to be severely negative. This is not what we voted for.”

Many people on Wall Street were initially comforted by Trump’s appointment of Scott Bessent as Treasury Secretary. But not only did the former chief investment officer at Soros Fund Management fail to temper the president’s worst instincts on tariffs, his own views are far from reassuring.

In an interview with Tucker Carlson released on Friday, Bessent admitted he wasn’t happy with what’s going on in the markets; however, he noted the wealthiest 50% of Americans are the ones who own equities whereas the bottom 50% have “credit card debt bills, they rent their homes, they have auto loans and we’ve got to give them some relief.”

“We have gone to a highly financialized economy, we have stopped making things,” the Treasury Secretary added, reminding viewers that on the campaign trail he spoke of how “Wall Street’s done great, it can continue doing well, and it’s Main Street’s turn.” While I’m all for helping the working poor, it’s possible to achieve that goal without sacrificing everyone with a 401k retirement plan.

Furthermore, Bessent seemed in denial about the causes of the sell-off, insisting it had more to with the rise of Chinese artificial intelligence competition, rather than Trump’s policies: it’s “a Mag 7 problem, not a MAGA problem,” he said.

Well, no. It’s mostly a MAGA problem, as the scale of the global stock market selloff shows, and this ideological fervor and Trump’s insistence on heeding radicals like trade czar Peter Navarro is what’s made investors so worried.

Responding to Commerce Secretary Howard Lutnick’s cheerleading for tariffs last week, hedge fund manager Dan Loeb of Third Point LLC noted on X that industrials and manufacturing stocks didn’t appear enthused about “this leveling of the playing field”.

At least one major investor and Trump backer, venture capitalist Chamath Palihapitiya, has skipped passed denial and advanced all the way to the acceptance phase. In his telling, Trump is just doing what he said would on the campaign trail and anyone expecting the president to capitulate on tariffs is likely to be disappointed. “Conventional wisdom has been that there is always a Fed put or a White House put if the stock market contracts enough but this may be a moment to hold a radical new view which is that the put is off the table,” he wrote on X on Saturday.

Echoing an administration talking point, he highlighted the decline in 10-year Treasury yields, which have dipped below 4%, as evidence Trump’s strategy is “working” to reduce government borrowing costs. However, to state the blindingly obvious, bond yields have declined because investors fear a recession — which would make it even harder to balance the budget.

Trump’s backers on Wall Street and in Silicon Valley obviously still have a way to go to process their tariff grief. But billionaires hopping aboard a blue collar anti-establishment wrecking ball were asking for an uncomfortable ride — and now Trump’s revolution is eating its own.