Market perspective: What to expect from the next 100 days
Following a chaotic start for the new administration, there’s hope a policy shift away from trade wars might bring stability to financial markets.
Summary
- The full economic impact of tariff turmoil has yet to be felt, according to Niladri “Neel” Mukherjee, TIAA Wealth Management’s chief investment officer.
- There are opportunities for de-escalation of tensions between the United States and key trading partners (including China) and for a Trump policy pivot to fiscal policy and deregulation.
- Against this backdrop, Mukherjee urges investors to stick to their long-term financial plans and resist the urge to time the market.
A four-pillar road map
Last December in TIAA Wealth Management’s
Trump’s first 100 days have reinforced his view, Mukherjee writes in
Mukherjee says the road map forward revolves around four policy pillars—trade policy, fiscal policy, immigration policy and deregulation. Each has potential to impact markets differently, depending on what Trump prioritizes in coming months. Given the uncertainty, Mukherjee recommends investors stick with their long-term financial plans and resist the urge to time the market.
Read the full version of May’s CIO Perspectives
Trade policy
So far, tariffs have been the centerpiece of President Trump’s economic agenda. It’s clear tariffs aren’t simply a tactic to force trade partners to the negotiating table but also a policy initiative designed to generate new revenue and bring manufacturing jobs back home. This heightened protectionism poses risks for investors. It could reduce long-term demand for U.S. assets if foreign investors stop believing in U.S. economic exceptionalism. They’ll also have fewer dollars to spend on U.S. assets. “Foreign countries exporting fewer goods to the United States means fewer U.S. dollars being sent overseas to pay for them,” writes Mukherjee. “Historically, a lot of those dollars wind up reinvested in U.S. stocks, bonds and real estate, which supports prices of those assets.”
That said, President Trump does seem sensitive to consequential swings in equity and bond prices and to the slide in his job approval ratings. Mukherjee points to a more conciliatory tone from the administration on tariffs since the end of April—likely an attempt to calm nerves and reduce near-term risks to the economy and markets. As of this writing, new trade deals have been announced with the United Kingdom and China (the latter boiling down to a 90-day tariff truce), and several other deals are apparently under discussion with key trading partners (mostly Asian countries). “Trade tensions between China and the U.S. aren’t going away,” Mukherjee said. “But the tariff deal announced May 12 is welcome news. For U.S. consumers, it reduces the risk of sharp price increases. For U.S. companies—particularly those that rely on imported goods and materials—it means less pressure on profit margins.”
Fiscal policy
One reason equity markets reacted so positively to the November 2024 election was Trump’s campaign pledge to cut corporate taxes and extend expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA). So far, however, fiscal policy has been deemphasized during the administration’s first 100 days.
That said, Congress is seeking to enact President Trump’s key tax reform priorities via the reconciliation process, which allows the Senate to forgo the 60-vote filibuster requirement so the bill won’t need the support of Democrats. While Mukherjee expects the bill to become law, the timing remains uncertain.
While a focus on tax cuts and fiscal restraint could represent positive developments for the economy and markets in the near term, there are some provisos to this view, according to Mukherjee:
- The stimulus effect of tax cuts could be much smaller than in 2017, given that around $4.5 trillion out of the total $6 trillion in additional deficit over the next decade would stem from the extension of existing tax cuts,1 thus providing little incremental benefit to consumers.
- The Committee for a Responsible Federal Budget estimates that Senate proposals would cause the ratio of U.S. debt held by the public to GDP to spike from around 100% today to 211% over the next 30 years, compared to the 156% current baseline projection by the Congressional Budget Office (CBO). Markets could begin to express increased fiscal sustainability concerns, which could translate to higher bond yields, lower equity valuations or a weaker U.S. dollar.
- The government’s initial efforts to slash budget spending (run primarily through DOGE) seems to have fizzled—U.S. Treasury’s daily data shows budget outlays are approximately 3% higher than they were at the same point last year. However, a strong contingent within Congress and the White House is likely to push for more sizeable cuts. These could reduce fiscal concerns but with risks to the economy, given many of the targeted spending categories (federal jobs, food stamps, Medicaid, federal contracts, and aid to state and local government) play a key role in supporting the U.S. private sector.
“We think a shift from trade policy to fiscal policy by the Trump administration in the second half of the year could be a welcome development for investors in search of short-term offsets to rising risks to the U.S. economy,” writes Mukherjee. “Part of this optimism could already be reflected in the more positive equity price action since mid-April.”
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Immigration policy
Long-term economic growth tends to be tied to working-age population growth and productivity growth. The core case for U.S. economic exceptionalism has long been rooted in the former—favorable demographics relative to other key economies. The most recent CBO population projections2 estimate the U.S. working-age population will grow approximately 6% over the next 30 years, compared to a decline of 15% to 25% for Japan, the Eurozone and China.3
Trump administration efforts to curtail immigration, increase deportations and potentially cancel protected-status programs (asylum seekers and refugees, categorized under Lawful Permanent Residents) make it likely that the CBO projections (estimating 2.3 million undocumented immigrants and 3.3 million lawful immigrants over the next four years) could already be outdated. Even before accounting for data on deportations (which have not yet been updated in 2025), data from the U.S. Customs and Border Protection agency shows nationwide encounters with undocumented immigrants have dropped from a monthly average of 192,000 in 2024 to a monthly average of 29,000 in February and March this year.
Deregulation
Deregulation efforts are, in Mukherjee’s view, the most promising part of President Trump’s economic agenda. While the pace of issuance of new “economically significant rules,”4 as tracked by the George Washington University’s Regulatory Studies Center, has slowed, there’s yet to be a net reduction of federal regulations. That said, there are reasons to be optimistic. On February 19, President Trump mandated federal agencies identify for elimination or modification regulations that are unconstitutional or unlawful. As a result, we could see deregulation acceleration as the year progresses. The positive impact, specifically on productivity growth, may depend on what sectors are targeted and how long deregulation takes to materialize.
Conclusions
After a chaotic first 100 days, Mukherjee sees opportunities over the next 100 for de-escalation of tensions between the United States and key trading partners (including China) and for the Trump administration to pivot to fiscal policy and deregulation.
The range of possible outcomes for investors remains wide, with risks tilted to the downside. In this environment, Mukherjee expects market volatility to remain elevated. In such an environment, it’s especially important for investors to remain disciplined. Opportunities for investment gains increase over time, and since 1926, S&P 500 returns have been positive 79% of the time over 12-month holding periods, 99% of the time over eight-year holding periods and 100% of the time over 15-year holding periods.5
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1Committee for a Responsible Federal Budget, “What’s in the Senate’s Concurrent FY 2025 Budget?” Apr. 3, 2025,
2Congressional Budget Office, “The Demographic Outlook: 2025 to 2055,” Jan. 13, 2025,
3Word Bank Group, DataBank, Population Estimates and Projections,
4Economically significant rules are regulations issued by executive branch agencies that are deemed as likely to have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities.
5On a daily basis, the stock market is akin to a coin toss in terms of gains versus losses. However, the further you extend your investment time horizon, the higher the chance of experiencing gains. Source: Morningstar Direct, Bloomberg, TIAA Wealth Chief Investment Office. S&P 500 TR USD: IA SBBI U.S. Large Stock TR USD Ext from 1926-1970; S&P 500 TR USD thereafter. S&P 500 Price Return (PR). Daily data, from 1/1/1950 to 12/31/2024; daily, monthly and various annual holding periods.
The TIAA group of companies does not provide tax or legal advice. Tax and other laws are subject to change, either prospectively or retroactively. Individuals should consult with a qualified independent tax advisor and/or attorney for specific advice based on the individual’s personal circumstances.
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