Unfortunately impossible to know because dependent on a bunch of factors that are outside rationality. If the tariffs are scaled back tomorrow, probably the damage would be pretty limited but it's not looking like anybody reasonable is around or in charge...
I genuinely think a Great Depression sized 90% reduction is plausible. If the Trump administration somehow makes a trusted ironclad commitment that they will never ever reduce the tariffs, but doesn't actually convince anyone that the tariffs are good, the market will still expect Congress or the next administration to reduce them. And thus capital investments will still be largely impossible in any sector exposed to them. (Even if your investment isn't directly exposed, can you be confident that Trump won't blow it up on some other quixotic crusade?)
The average price to earnings ratio of the s&p 500 since 1990 is about 20.
We are currently still above that.
And when tariffs work their way through, it might stay that way on their way down...
Yeah but it's been >20 a few times, but sure it does look high.
It's hard to say because they may back off on the tariffs and things go back to normal or there may be more trade war. Markets can crash by a lot if things go bad.
Look at volatility indicators perhaps? If they're unusually high, it suggests that further declines are very much possible if this policy change is not reversed.
That would admit being wrong and would be political suicide for these people. They’re going to go all the way.
Nah probably around 30% from ath, or a little more. 50% would be really extreme. The tariffs will have a massive impact but not that big, imo. It won't completely destroy the US economy.