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Forget Tariffs! This Is the Single Greatest Threat to the Trump Bull Market, and It's Expected to Become a Reality on May 15.

April 26, 2026 — 06:56 am EDT

Written by

Sean Williams for

The Motley Fool->

Key Points

- From a statistical standpoint, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite have shone under President Donald Trump.

- Although Trump's tariffs have historically been problematic for businesses and the stock market, they aren't Wall Street's biggest problem.

- Jerome Powell's term as Fed chair ends on May 15, which may open a can of worms for Wall Street and Powell's nominated replacement, Kevin Warsh.

- 10 stocks we like better than S&P 500 Index ›

From a statistical standpoint, Wall Street has loved having Donald Trump in the White House. Although the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) usually rise under most presidents, the annualized returns under President Trump have been well above average.

During his first term, the Dow, S&P 500, and Nasdaq Composite gained 57%, 70%, and 142%, respectively. Meanwhile, these major indexes are up by 14%, 19%, and 24%, respectively, in his second, non-consecutive term, as of this writing on April 20.

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President Trump speaking with the media. Image source: Official White House Photo by Molly Riley.

While there are ample catalysts powering this rally, including the rise of artificial intelligence and record S&P 500 share buybacks, there are also headwinds looking to knock stocks off their pedestal.

Although investors have previously focused on President Trump's tariff and trade policy as the impetus that could halt the Trump bull market in its tracks, another far greater threat looms large -- and it's expected to become a reality on May 15.

Tariffs have historically been problematic for the stock market under Donald Trump

Tariffs have been the talk of Wall Street since President Trump's inauguration on Jan. 20, 2025.

In April of last year, the president unveiled a sweeping 10% global tariff and introduced higher reciprocal tariffs on dozens of countries deemed to have adverse trade imbalances with America. These reciprocal tariffs were altered, paused, and/or canceled on several occasions before they were struck down by a U.S. Supreme Court ruling in February 2026 that stated the International Emergency Economic Powers Act didn't authorize them.

Following this ruling, Donald Trump's administration imposed a new, but temporary (150 days), 10% global tariff, using different policy justifications.

🚨 President Donald J. Trump imposes a 10% global tariff on all countries. pic.twitter.com/42ZGDnMxbR

-- The White House (@WhiteHouse) February 20, 2026

The president's goal with tariffs is to encourage businesses to manufacture goods destined for U.S. markets domestically. These surcharges are also designed to make U.S. products more price-competitive with imported goods.

However, a December 2024 report ("Do Import Tariffs Protect U.S. Firms?") by four New York Federal Reserve economists writing for Liberty Street Economics showed that Trump's tariffs can be problematic for businesses and the stock market.

The economists analyzed how the tariffs Trump imposed on China in 2018-2019 impacted businesses and publicly traded companies. They found that businesses impacted by Trump's China tariffs, on average, experienced declines in employment, labor productivity, sales, and profits from 2019 to 2021.

More importantly, Trump's input tariffs often dented corporate profits. An input tariff is a duty placed on an imported good (e.g., steel) used to complete the manufacture of a product in the U.S. Input tariffs often raised production costs and made it more challenging for U.S. goods to be price-competitive with imported products.

While Trump's tariffs don't have the best track record on Wall Street, something far more nefarious awaits.

Jerome Powell's last day as Fed chair is May 15. Image source: Official Federal Reserve Photo.

The Federal Reserve is about to enter a new era, and the Trump bull market may pay the price

May 15 will mark the final day of Jerome Powell's tenure as Fed chair. This end date has been telegraphed for quite some time, with President Trump a vocal critic of Powell and the Federal Open Market Committee (FOMC) since the beginning of his second term. The FOMC is the 12-person bod