Following the market’s reaction to Donald Trump’s recent tariff hikes, many investors remain fixated on short-term stock declines. But I’m less concerned about the immediate drop in equities and more focused on the broader ripple effects — especially given the current state of U.S. fiscal policy.
The Trump administration inherited serious economic challenges from the last four years of Bidenomics, a mess made much worse by unsustainable levels of deficit spending.
A stock market downturn could cut tax revenue significantly. In that case, any interest savings might be wiped out — or worse.
U.S. debt has surpassed 120% of GDP. Deficits now resemble those of a wartime economy. The government’s interest payments exceed defense spending — a major warning sign for any nation. Meanwhile, inflation remains stubbornly high.
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