Marko Kolanovic Sees Trump Nears Ending Tariffs "Clown Show" Amid Market Pressure

President Trump has steadfastly maintained that he will not alter his trade policies, despite the significant unrest they have unleashed across global financial markets.

However, Marko Kolanovic, a seasoned financial strategist formerly with jpmorgan chase & co., argues that Trump is on the brink of succumbing to market pressure and revising his tariff stance.

Kolanovic, recognized for his consistently bearish outlook on markets, introduces the concept of the "Trump put," a theoretical threshold at approximately 4,800 on the S&P 500 Index—roughly 300 points below its recent trading levels. The S&P 500, a key benchmark tracking the performance of 500 major U.S. companies, serves as a barometer of market health. According to Kolanovic, if the index approaches this 4,800 level, Trump may feel compelled to intervene to bolster the market, potentially by scaling back his aggressive tariff policies. This idea draws from the financial term "put option," which implies a safety net or floor designed to limit losses.

Kolanovic's theory gained traction when the S&P 500 dipped close to this critical level earlier in a recent trading session, only to rebound sharply. He attributes this recovery to growing speculation among investors that Trump might reconsider his tariff strategy in response to the market's distress signals.

Kolanovic's assertion that Trump is nearing a policy reversal stems from both observable cues and market dynamics. "He's starting to see that he basically lost this," Kolanovic remarked in an interview, pointing to Trump's body language and the chaotic events surrounding his administration as indicators of mounting pressure. He suggests that Trump is beginning to recognize the detrimental impact of his tariff policy, not just on financial markets but on his own political image.

The strategist's confidence is further rooted in Trump's well-documented tendency to view the stock market and broader economy as measures of his presidency's success. Kolanovic argues that if market losses become too severe, Trump will be motivated to act. "Trump can say he doesn't care about markets," he noted, "but markets lead the economy." This statement highlights his belief that sustained market downturns could trigger broader economic fallout—consequences Trump would likely seek to avoid.

The basis for Kolanovic's analysis is vividly illustrated by recent market behavior. On Monday, the S&P 500 experienced a dramatic intraday swing of over eight percentage points—the largest since the pandemic-driven bear market of 2020. This volatility followed Trump's tariff announcement the previous Wednesday, which had already erased more than $5 trillion in market value over the prior two trading sessions. Kolanovic described the situation as a "clown show," emphasizing its unsustainability and the urgent need for resolution, given its adverse effects on markets, the economy, and Trump himself.

Despite the market upheaval, Trump has publicly doubled down on his tariff agenda. Speaking to reporters during an interview on Sunday, he acknowledged uncertainty about the market's trajectory but insisted that the tariffs' primary goal is to eliminate bilateral trade deficits. On Monday, he escalated tensions by threatening an additional 50% import tax on China and signaled upcoming trade negotiations with Japan and Israel. These actions underscore his determination to press forward with his trade policies, at least rhetorically.

Kolanovic's prediction hinges on a fundamental insight: Trump's reliance on economic indicators as a "report card" for his administration. The "Trump put" represents the point at which market pain becomes politically untenable, prompting intervention. By linking market performance to economic stability, Kolanovic posits that Trump cannot afford to ignore the cascading effects of prolonged market instability. The recent rebound in the S&P 500, spurred by hopes of a tariff retreat, reinforces this view, suggesting that investors are already anticipating a shift.

Ask Aime: How might Trump's stance on tariffs impact the global market?