The Tonight Show host Jimmy Fallon joked this week, “It’s not great when the summary of Trump’s first two months in office is: stocks down, measles up.”

President Trump doesn’t deserve blame for the recent measles outbreak. However, there’s a good case to be made that his words and actions have contributed to the stock market sell-off.

The Nasdaq Composite Index (NASDAQINDEX: ^IXIC) and the S&P 500 (SNPINDEX: ^GSPC) are in correction. The Dow Jones Industrial Average (DJINDICES: ^DJI) isn’t too far away from correction territory. All the gains achieved since the U.S. presidential election on Nov. 5, 2024, have evaporated — and then some.

What’s the biggest factor behind the stock market’s decline? Investors’ worries about the negative impact of President Trump’s tariffs. But I predict that Trump’s tariffs won’t cause a stock market crash for one simple reason.

Image source: Getty Images.

Don’t get me wrong: I think tariffs are concerning. The recent stock market sell-off is at least partially justified, in my view.

The Conference Board’s Consumer Confidence Index fell sharply in February, the biggest one-month decline since August 2021. Consumers have become more pessimistic about the economy. They’re particularly worried about rising inflation and tariffs, according to Stephanie Guichard, a senior economist with The Conference Board.

Steep tariffs could result in higher prices for consumers on many products. That’s especially problematic coming on the heels of the skyrocketing inflation in the aftermath of the COVID-19 pandemic. If consumers cut back on their spending, businesses will feel the pain.

Perhaps the greatest risk is that tariffs lead to a full-blown trade war. We’re already seeing some signs this could happen. With the Shiller S&P 500 CAPE ratio at historically high levels, a trade war probably wouldn’t bode well for stocks.

However, I don’t expect the stock market will crash, despite legitimate concerns about tariffs. The simple reason behind my relative optimism is that President Trump can pause the tariffs instantly. I suspect he would do so if hints of a bona fide market meltdown emerged. (By the way, the recent declines don’t qualify as a meltdown, in my opinion.)

It’s no secret that Trump watches the stock market. He bragged in an interview with Fox News’ Bret Baier on Feb. 9, 2025: “I was very proud to have handed over the country when the stock market was higher than it was, previous to the pandemic coming in. It was an amazing achievement.” Trump proclaimed at an investors’ conference 10 days later, “I think the stock market is going to be great.”

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