Home Coronavirus Trump Response to Viral Outbreak Has Market Consequences

Trump Response to Viral Outbreak Has Market Consequences


Trump’s strategy of providing choice words to placate markets during the China trade war has seemed to backfire during the Coronavirus outbreak. His attempts to downplay the danger of the virus, and the results seem disastrous. When Trump saw that businesses were beginning to cancel events, he tried to use the strategy of downplaying the situation to the point of suggesting that people buy stocks even while the numbers of infected were growing exponentially. Such advice would have had severe consequences for investors and traders.

Trump tried to take a different approach on March 11 in his speech to the nation that featured a travel ban from Europe that was described in vague detail. The confusing plan caused another big market selloff that solidified the bull market that had been a trend that began two years ago. The connection between the speech and the selloff was evident as it took place while he was on the air.

The S&P 500 has dropped by 25% since the middle of February. This feels very ironic for this president who has based his image almost entirely on the performance of the stock market, claiming to have caused all-time high performance on Wall Street due to his policies.

Although Trump is not to blame for the virus spreading to US shores, he has undeniably halted early responses to the situation that could have slowed the speed at which the cases have spread in the last several weeks. Trump has stuck with the strategy of trying to deny and minimize the threat of the outbreak while claiming that it is overblown by the media just to harm his chances of re-election.

The travel ban caused a panic for Americans in Europe who could end up stranded in foreign countries. Trump exempted Great Britain from the ban, but he didn’t explain why, which added even more confusion to the situation. It was speculated that the exemption was motivated by the fact that he owned golf courses in those countries. Rather than coordinate with countries to create a travel restriction policy, Trump made a quick, rash move that took people by surprise and caused panic. It’s not clear how devastating the virus will be to U.S. citizens, but it is clear that an economic recession is going to harm the markets in the coming months.