Days, weeks, or months? Wall Street experts fear that the stock market crash following Trump’s tariffs is just beginning

The Dow Jones Industrial Average opened way down as investors continued their selling spree following President Trump’s announcement of widespread tariffs on some of the country’s most important trading partners. However, over the day, tensions eased slightly, with the Dow making up a little bit of ground compared to pre-trading levels.

Wall Street leaders warn that the economic situation could become much worse

Wall Street warns that the economic situation could become much worse. Over the last five days, the three major indices that track the value of critical stocks on Wall Street—the Dow, the S&P 500, and the Nasdaq Composite—have also seen a decrease of over 10%. Some major figures in the financial sector, like BlackRock CEO Larry Fink, believe the downturn could continue. Speaking at an event hosted by The Economic Club of New York, Fink mentioned that the economy was weakening as the event was taking place, and did not rule out another drop worth 20 percent of the market in the coming weeks and months.

Investors are complaining about the lack of clarity on how the tariffs will impact their businesses. They are confused about whether the tariffs are a negotiating tactic or if the president really wants to reshape global trade relations in favor of the US, even if it comes with short-term pain from Main Street to Wall Street.

Fink also told the crowd in New York that many CEOs fear the economy has already entered a recession. Typically, a recession is determined to be taking place when an economy reports two consecutive quarters of decreases in GDP growth.

JP Morgan Chase CEO, Jamie Diamon penned a letter to shareholders that was far less dramatic than the comments made by Fink. While, Diamon did believe that that a recession was possible, he said that one could still be avoided, though slower growth was still likely to be seen as a result of the tariffs.

Federal Reserve warns that inflation could begin to take hold again

The Federal Reserve warns that inflation could begin to take hold again. Last week, Fed Chair Jerome Powell warned that the tariffs could have a much larger impact on the economy than originally projected by the central bank. Powell made it clear that as higher tariffs are imposed, the economy is likely to see an increase in inflation, which could mean an unwillingness to lower interest rates.

Additionally, Powell stressed the difficulties in evaluating the full impact of the tariffs on inflation, employment, and economic growth. “While uncertainty remains elevated, it is now becoming clear that the tariff increases will be significantly larger than expected,” reported Powell, who also added that the “same is likely to be true of the economic effects, which will include higher inflation and slower growth.”

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