Stock market: Signs that Trump has begun responding to negative impact of tariffs
Jefferies said the longer the tariffs are in place, and they are currently running at an annualised $376 billion based on October data, the more likely most of the bill will be paid for by the American consumer.
- Dec 1, 2025,
- Updated Dec 1, 2025 2:20 PM IST
Even as the domestic market awaits a tariff deal between India and the US, Jefferies, in a note, indicated that US President Donald Trump has begun taking note of the negative fallout from his global tariff actions and has started responding to it.
In a GREED & fear note, Jefferies said it used to think that the mid-term elections were not so important to Donald Trump personally because he cannot run again for the presidency. "But it became self-evident that such an assumption was wrong when it was pointed out to GREED & fear that the House of Representatives has the power to launch impeachments. For such reasons continuing Republican control of the House next November is a priority for the 47th president," it said.
Jefferies said the polling data continued to show that tariffs are not popular. "An Economist/YouGov poll conducted between 15-17 November shows that 47 per cent of respondents want tariffs on foreign goods to be reduced and only 13 per cent want them to be increased. While 73 per cent of Americans say that Trump’s tariffs have increased the prices they have paid either a lot (40 per cent) or slightly (33 per cent)," it noted.
Jefferies said this is not surprising since the longer the tariffs are in place, and they are currently running at an annualised $376 billion based on October data, the more likely most of the bill will be paid for by the American consumer.
"These political pressures explain why the Trump administration in the past two weeks suddenly cut tariffs on items like beef, coffee and bananas to the benefit of a country like Brazil which, it should be recalled, was suddenly hit by 50 per cent tariffs in late July because the Donald did not like the treatment of former president Jair Bolsonaro," it said.
In the case of India, Equirus Securities called the US tariffs as the biggest external risk, adding that exports to the US has dropped 40 per cent since May 2025, significantly affecting labour-intensive sectors like textiles. That said, diversification of exports to non-US markets is helping to cushion the disruption, it said.
"India’s 5-year market return tops global peers; strong ROE and MSCI outperformance post-COVID underpin long-term strength, while a year of correction has made valuations somewhat more reasonable," the domestic brokerage said.
Jefferies said there is also the issue that the US Supreme Court is due to rule on the legality of the Trump administration’s tariffs in coming weeks. Jefferies said that could lead to a huge refund bill for the Treasury potentially totaling more than $100 billion, resulting in an administrative and bureaucratic nightmare, not to say a costly one.
"Total tariff collection was $195 billion in FY25 ended 30 September, or a $118 billion increase from $77 billion in FY24. An added complication is that the tariff revenue is now part of the US General Fund which Congress controls though it is managed by the Treasury. Certainly, the sudden realisation that the tariff revenue may no longer be “money good” could also be a potential negative for the Treasury bond market for those who view the increased revenues from tariffs as one explanation for the relative calm of the long-end of the Treasury bond market in recent months compared with other G7 markets," Jefferies said.
Another sign that Trump has begun to react to the negative impact of tariffs politically is that he has proposed giving every American, excluding “high-income people”, a dividend of “at least” $2,000, presumably to compensate for the price hikes caused by tariffs. In addition to the precedent from Covid of what such handouts can do in terms of exacerbating inflationary pressures, such a policy would also be a negative in terms of the fiscal impact, Jefferies said.
"This is because such a handout is estimated to cost at least $400 billion. A new study released on 17 November by the Yale Budget Lab estimated that a one-time $2,000 per person rebate for Americans earning less than $100,000 per year would cost $450 billion," it said.
Jefferies said Trump has begun to be concerned about the waning support of his base, citing an extraordinary U-turn recently, as regards the release of the Department of Justice’s files on the Epstein case. This only occurred after it became clear that the Trump administration was going to lose a vote in the House on continuing to suppress the files, Jefferies said.
"Remember that the House of Representatives went into summer recess on 23 July, one day earlier than scheduled, deliberately to stop such a vote from happening," it said.
"None of this is of short-term relevance to financial markets. But that next year is when the mid-terms take place is relevant, not least because history shows that it is the year in the presidential cycle when share prices rally the least. On that point, in the past 24 presidential cycles since 1929, the S&P500 rose by an average 3.3 per cent in the second year of a cycle with only 54 per cent of those years posting a positive return," it said.
For India, Equirus Securities said valuation froth is off the top, but the market is still priced well above long-term norms. Risk-reward favours large caps and quality compounders where valuations are closer to historical bands, while mid/small caps and over 50 times names remain vulnerable to any earnings disappointment.
"Broader re-rating from here requires earnings upgrades, not further multiple expansion," it said.
Even as the domestic market awaits a tariff deal between India and the US, Jefferies, in a note, indicated that US President Donald Trump has begun taking note of the negative fallout from his global tariff actions and has started responding to it.
In a GREED & fear note, Jefferies said it used to think that the mid-term elections were not so important to Donald Trump personally because he cannot run again for the presidency. "But it became self-evident that such an assumption was wrong when it was pointed out to GREED & fear that the House of Representatives has the power to launch impeachments. For such reasons continuing Republican control of the House next November is a priority for the 47th president," it said.
Jefferies said the polling data continued to show that tariffs are not popular. "An Economist/YouGov poll conducted between 15-17 November shows that 47 per cent of respondents want tariffs on foreign goods to be reduced and only 13 per cent want them to be increased. While 73 per cent of Americans say that Trump’s tariffs have increased the prices they have paid either a lot (40 per cent) or slightly (33 per cent)," it noted.
Jefferies said this is not surprising since the longer the tariffs are in place, and they are currently running at an annualised $376 billion based on October data, the more likely most of the bill will be paid for by the American consumer.
"These political pressures explain why the Trump administration in the past two weeks suddenly cut tariffs on items like beef, coffee and bananas to the benefit of a country like Brazil which, it should be recalled, was suddenly hit by 50 per cent tariffs in late July because the Donald did not like the treatment of former president Jair Bolsonaro," it said.
In the case of India, Equirus Securities called the US tariffs as the biggest external risk, adding that exports to the US has dropped 40 per cent since May 2025, significantly affecting labour-intensive sectors like textiles. That said, diversification of exports to non-US markets is helping to cushion the disruption, it said.
"India’s 5-year market return tops global peers; strong ROE and MSCI outperformance post-COVID underpin long-term strength, while a year of correction has made valuations somewhat more reasonable," the domestic brokerage said.
Jefferies said there is also the issue that the US Supreme Court is due to rule on the legality of the Trump administration’s tariffs in coming weeks. Jefferies said that could lead to a huge refund bill for the Treasury potentially totaling more than $100 billion, resulting in an administrative and bureaucratic nightmare, not to say a costly one.
"Total tariff collection was $195 billion in FY25 ended 30 September, or a $118 billion increase from $77 billion in FY24. An added complication is that the tariff revenue is now part of the US General Fund which Congress controls though it is managed by the Treasury. Certainly, the sudden realisation that the tariff revenue may no longer be “money good” could also be a potential negative for the Treasury bond market for those who view the increased revenues from tariffs as one explanation for the relative calm of the long-end of the Treasury bond market in recent months compared with other G7 markets," Jefferies said.
Another sign that Trump has begun to react to the negative impact of tariffs politically is that he has proposed giving every American, excluding “high-income people”, a dividend of “at least” $2,000, presumably to compensate for the price hikes caused by tariffs. In addition to the precedent from Covid of what such handouts can do in terms of exacerbating inflationary pressures, such a policy would also be a negative in terms of the fiscal impact, Jefferies said.
"This is because such a handout is estimated to cost at least $400 billion. A new study released on 17 November by the Yale Budget Lab estimated that a one-time $2,000 per person rebate for Americans earning less than $100,000 per year would cost $450 billion," it said.
Jefferies said Trump has begun to be concerned about the waning support of his base, citing an extraordinary U-turn recently, as regards the release of the Department of Justice’s files on the Epstein case. This only occurred after it became clear that the Trump administration was going to lose a vote in the House on continuing to suppress the files, Jefferies said.
"Remember that the House of Representatives went into summer recess on 23 July, one day earlier than scheduled, deliberately to stop such a vote from happening," it said.
"None of this is of short-term relevance to financial markets. But that next year is when the mid-terms take place is relevant, not least because history shows that it is the year in the presidential cycle when share prices rally the least. On that point, in the past 24 presidential cycles since 1929, the S&P500 rose by an average 3.3 per cent in the second year of a cycle with only 54 per cent of those years posting a positive return," it said.
For India, Equirus Securities said valuation froth is off the top, but the market is still priced well above long-term norms. Risk-reward favours large caps and quality compounders where valuations are closer to historical bands, while mid/small caps and over 50 times names remain vulnerable to any earnings disappointment.
"Broader re-rating from here requires earnings upgrades, not further multiple expansion," it said.