President Trump and his trade warriors seem to think ordinary Americans and wealthy investors live in parallel universes that never intersect. They talk about Trump tariffs that might dent investment portfolios but will leave workers better off. “Wall Street’s done great,” Treasury Secretary Scott Bessent likes to say. “But this administration is about Main Street.”
Yet it’s ordinary Americans who stand to lose the most from Trump tariffs that are now shredding financial markets and threatening a recession. Since taking office in January, Trump has imposed the most aggressive set of taxes on imports in nearly 100 years, culminating in the huge set of tariffs Trump announced on April 2. Trump dubbed April 2 “Liberation Day” because he thinks tariffs will somehow lead to new levels of prosperity. Investors call it “Obliteration Day” because of the massive losses that promptly followed.
Read more: What Trump’s tariffs mean for the economy and your wallet
Since Obliteration Day, the S&P 500 (^GSPC) index has dropped by 10%, one of the fastest short-term declines ever. The S&P is down 17% from its mid-February peak, which is nearly a bear market. The six-week plunge in stocks has destroyed nearly $11 trillion of wealth.
Whose money is that?
There’s a Trumpworld meme suggesting that stock market wipeouts only harm the wealthy. On social media, Trump himself shared a sketchy video claiming that he’s playing a “secret game” in which exorbitant tariffs wreck equity valuations, forcing more investor money into bonds, which lower interest rates, to the benefit of ordinary people who borrow money. “Now remember,” an unseen narrator imparts in the video, “94% of all stocks are owned by only 8% of Americans, so Trump is taking from the rich short term and handing it to the middle class through lower prices.”
Look out below: Traders work on the floor of the New York Stock Exchange during morning trading on April 7, 2025, in New York City. (Michael M. Santiago/Getty Images) ·Michael M. Santiago via Getty Images
That’s completely bonkers, as any of the 70 million Americans with a 401(k) retirement plan surely knows after a simple glance at their 2025 losses. In fact, middle- and lower-income Americans will bear the brunt of the Trump stock crash in at least three crucial ways.
The first is directly, through investment losses. It’s true that the majority of stocks are owned by the wealthy. But it’s also true that stocks are a crucial source of wealth for millions of families that are not wealthy. About 62% of Americans have stock market investments, according to Gallup. That’s up about 10 percentage points during the last decade, thanks to simplified investment vehicles like exchange-traded funds and online accessibility, which have democratized stock market investing.
Stock investments and defined contribution pension plans such as 401(k) accounts represent 17% of the assets held by middle-income Americans, according to Federal Reserve data. For those in the 60% to 80% income bracket, stocks are 22% of their wealth. Even low earners have some stock-market wealth, on average. Stocks as a portion of assets are highest for the wealthiest Americans, so they stand to lose the most from a selloff. But the rich are also less sensitive than the non-rich to small declines in wealth.
“Wall Street and Main Street prosper and suffer together,” Yardeni Research explained in an April 6 analysis. “Trump’s tariffs are causing a stock market crash that is hurting millions of Americans, especially the middle class and retired or retiring seniors.”
A second way Trump’s tariffs will hurt ordinary workers is through distortions in the labor market. Trump’s tariffs are supposed to support domestic industries by making imported goods more expensive and domestically produced goods more cost-competitive by comparison. But the economy isn’t nearly that simple, and tariffs hurt industries that rely on imported components that suddenly get more expensive.
The trade-off usually adds up to a net loss for the economy.
“You see in study after study that the job losses associated with supply chain disruption exceed job gains in protected sectors,” economist Kimberly Clausing of the Peterson Institute for International Economics said during an April 7 online seminar. “We’re going to see that production actually goes down for US manufacturing. This is going to make [workers’] lives harder, not better.”
Read more: The latest news and updates on Trump’s tariffs
The goose that is killing the golden egg? President Donald Trump arrives at the White House on Marine One, Sunday, April 6, 2025, in Washington. (AP Photo/Manuel Balce Ceneta) ·ASSOCIATED PRESS
A third adverse effect will come from the way big companies with crashing stock prices react to the mayhem. A company’s stock price isn’t a random reward for investors. It’s the market’s collective estimate of a company’s future revenue and profit. Stocks have been reeling because investors suddenly think most companies will make less money in the future.
And what happens when employers make less money? They invest less, spend less, and start cutting their workforce. Goldman Sachs thinks uncertainty alone will cut job growth by 20,000 per month and push the unemployment rate from 4.2% now to between 4.5% and 5% by the end of the year. It will be worse if the Trump tariffs cause a full-blown recession.
Every tenth of a percentage point increase in the unemployment rate represents about 230,000 lost jobs. If unemployment rises by a full point, that would be 2.3 million newly unemployed workers. A few will be Wall Street fat cats, but most will be rank-and-file Americans who need a paycheck to support themselves and their families.
Americans with no stake in the stock market might feel like the Trump crash is somebody else’s problem. It might be, for now. But when the whole investing world sees a storm coming, it will soon become everybody’s problem.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman.
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