Tariffs as business deals?

I am going to examine the financial market repercussions of President Donald Trump’s 2025 tariff policies, focusing on equities, bonds, derivatives, and interest rates. It explores how asymmetric information and alleged insider trading influenced market dynamics, highlighting the challenges posed to market integrity and investor confidence.​ In 2025, President Donald Trump’s administration implemented a series of tariffs targeting major trading partners, including China, Canada, and Mexico.

These policies aimed to protect domestic industries but resulted in significant volatility across global financial markets. The sudden shifts in trade policy introduced uncertainty, affecting various asset classes and raising concerns about the exploitation of insider information. In response to escalating market turmoil and international pressure, President Trump announced a 90-day deferral on certain tariffs, via social media on April 9, 2025.



However, the announcement’s ambiguity led to continued market instability. Pre-Tariff Market Conditions (February 2025) In February 2025, US financial markets were experiencing relative stability. The S&P 500 was trading near record highs, buoyed by strong corporate earnings and positive economic indicators.

Interest rates remained steady, with the 10-year Treasury yield hovering around 3.9%, reflecting moderate inflation expectations and a balanced economic outlook. The CBOE Volatility Index (VIX), a measure of market volatility, was subdued, indicating investor confidence.

Impact on Financial Markets Equities and Traditional Investment Strategies The announcement of tariffs led to a sharp decline in US stock markets. Major indices, such as the Dow Jones Industrial Average and the Nasdaq Composite, experienced significant losses, with the Nasdaq entering bear market territory after a 5.82% drop.

The traditional 60/40 investment strategy, allocating 60% to equities and 40% to bonds, proved ineffective during this period, as both asset classes suffered losses due to rising bond yields and falling stock prices (Figure 1).​ Market Indices (S&P 500, Nasdaq, Dow Jones): Major crashes occurred on April 3–4, 2025, following the tariff imposition. Slight recovery or stabilisation followed Trump’s deferral tweet on April 9, but markets dipped sharply again on April 10 (Table 1).

Market Reaction to Tariff Imposition (April 2–5, 2025) * April 3, 2025: The S&P 500 plummeted by 4.88%, the Nasdaq Composite fell by 5.97%, and the Dow Jones Industrial Average declined by 3.

98%. The Russell 2000 entered bear market territory, dropping over 20% from its recent peak. ​ * April 4, 2025: Markets continued their downward trajectory.

The S&P 500 fell an additional 5.97%, the Nasdaq Composite decreased by 5.82%, and the Dow Jones Industrial Average dropped by 5.

50%. * April 5, 2025: The newly imposed tariffs officially took effect, further exacerbating market volatility and investor uncertainty. ​ * Over this period, US stock markets lost approximately $6.

6 trillion in value, marking the largest two-day loss in history. Market Response to Tariff Deferral (April 9–11, 2025) * April 10, 2025: Despite the deferral, the S&P 500 declined by approximately 15%, and long-term Treasury bonds faced significant selling pressure. The US dollar weakened, and gold prices surged as investors sought safe-haven assets.

* April 11, 2025: Consumer sentiment plummeted, with the University of Michigan Consumer Sentiment Index dropping to 50.8, the second-lowest level since records began in 1952. This decline reflected widespread economic pessimism amid the ongoing trade tensions.

Bond Market and Interest Rates The bond market reacted to the tariffs with increased yields, reflecting investor concerns about inflation and economic growth. The US 10-year Treasury yield rose to 4.358%, indicating expectations of higher interest rates.

This rise in yields contributed to the decline in bond prices, further challenging traditional investment strategies.​ 10-Year Treasury Yield: Climbed steadily from 3.9% to 4.

358% (April 2–21), suggesting increased inflation expectations and risk premium. The bond market experienced significant fluctuations during this period. Therefore, investors demanded higher returns for perceived increased risk.

This rise in yields indicated expectations of higher inflation and potential economic slowdown due to the tariffs. (Table 2). Derivatives and Market Volatility The derivatives market, including options and futures, experienced heightened volatility in response to tariff announcements.

The CBOE Volatility Index (VIX), often referred to as “Wall Street’s fear index,” spiked to its highest level since 2020, closing at 45.31 points. This surge in volatility presented both risks and opportunities for investors, particularly those with access to timely information.

​ VIX Volatility Index: Rose from 19 on April 2 to a peak of 45.31 on April 4, indicating extreme market fear. The VIX spiked to 45.

31, its highest level since 2020, indicating heightened market anxiety (Table 3). Asymmetric Information and Insider Trading Allegations Allegations of insider trading emerged during the tariff saga, highlighting concerns about asymmetric information. Congresswoman Marjorie Taylor Greene faced scrutiny for stock transactions made shortly before tariff announcements, including purchases in companies like Amazon and Tesla, and the sale of Treasury bills.

While Greene denied insider knowledge, the timing of these trades raised questions about the potential exploitation of non-public information (The Times, 2025).​ Additionally, unusual trading patterns in S&P 500 futures preceding major policy shifts suggested possible insider activity. Although direct evidence linking these trades to White House insiders remains inconclusive, the patterns underscore the challenges in detecting and preventing insider trading in policy-driven markets (Los Angeles Times, 2025) .

​ Tariff Decisions as Business Deals While tariffs are typically seen as instruments of trade policy aimed at protecting domestic industries or rebalancing trade deficits, the Trump administration’s 2025 tariff imposition and abrupt deferral appear less rooted in strategic policy and more akin to short-term market manipulations. These decisions unfolded not through institutional processes or legislative debates, but rather through presidential tweets and sudden reversals, strongly suggesting a deal-making mindset characteristic of business negotiations rather than public governance. The Role of Asymmetric Information and Market Elites Insider trading is traditionally associated with illegal access to non-public corporate information.

However, in this case, asymmetric political information—known only to a select few close to power—may have created an opportunity to profit. Market actors with proximity to decision-makers, or even sophisticated algorithms tied to social media monitoring, could have anticipated the tariff deferral. Billionaire investors and influencers like Elon Musk, who maintain both financial influence and political access, are often speculated to benefit from such opaque decision-making environments.

The quick reversal of tariffs led to a surge in tech stocks, many of which form the core holdings of large institutional investors, hedge funds, and elite entrepreneurs. For example: The Nasdaq rebounded by 1.5% following the deferral tweet.

Options trading volumes spiked on tech-heavy indices, indicating pre-positioning by well-informed actors. Reports from Bloomberg and Reuters noted unusual activity in Tesla call options shortly before the deferral ( Reuters, 2025; Bloomberg Markets, 2025 ). A Business Deal Mindset Trump’s own language underscores the deal-making philosophy.

The President tweeted that the tariffs were a “strong hand in negotiations” and “paused for talks with China”, using terms more common in corporate boardrooms than diplomatic channels. This rhetoric, combined with the lack of institutional transparency, raises serious concerns about the manipulation of public policy for private gains. In this light, the administration’s behaviour is not reflective of classical economic policy objectives like comparative advantage or strategic protectionism.

Instead, it aligns with the wealth-maximising tactics of a private enterprise, where the aim is to control narrative, timing, and volatility to benefit select stakeholders. Conclusions More critically, the Trump tariff saga of 2025 blurs the lines between public policy and private profit. The opacity, erratic timing, and informal communication channels—particularly via presidential tweets—suggest that these were less about coherent trade strategies and more akin to orchestrated business maneuvers.

The reactive movements of major indices, coupled with unusual options trading patterns and speculative capital flows, indicate that market elites likely capitalised on volatility, benefiting from privileged access or predictive positioning based on asymmetric information. This raises serious concerns about market integrity and the ethical boundaries between governance and profiteering. When financial markets are left vulnerable to abrupt and opaque political actions, especially ones lacking institutional oversight, the door opens to manipulation, insider trading, and erosion of public trust.

In sum, the 2025 Trump tariff episode serves as a cautionary tale—one that highlights the dangers of politicising economic policy, the vulnerabilities of global markets to personalised decision-making, and the importance of upholding the foundational principles of fairness, transparency, and accountability in modern financial systems. (The writer, a senior Chartered Accountant and professional banker, is Professor at SLIIT University, Malabe. He is also the author of the “Doing Social Research and Publishing Results”, a Springer publication (Singapore), and “Samaja Gaveshakaya (in Sinhala).

The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the official policy or position of the institution he works for. He can be contacted at saliya.a@slit.

lk and www.researcher.com).