Though there are important differences in the economic picture and market structure, investor Tom Lee thinks stocks could react similarly to tariffs this time as they did in 2018. In fact, Lee sees the contrasts between now and then as an even more advantageous backdrop for equity markets. "The combination of accommodative monetary policy and tariff resolution potential creates a unique 'Trump put' and 'Fed put' dynamic," Lee, the head of research at Fundstrat Global Advisors, wrote in his overnight market note Thursday. "This dual support mechanism could drive a strong equity rebound once clarity around tariffs emerges." In 2025, as in 2018, investors are on a knife's edge waiting for President Donald Trump to provide more clarity on tariffs . Back then, the S & P 500 tumbled 12% in just 10 days after Trump in January, at the World Economic Forum in Davos, Switzerland, began banging the tariff drum. That was followed by another 9% slide after the actual tariff announcement in March, and a 20% collapse later after Fed Chair Jerome Powell in October made a comment indicating more interest rate hikes were on the way. Once those storms passed, the index soared more than 30% in 2019. So what's different this time? For one, the Fed is currently contemplating more rate cuts, not hikes. Also, market technicals look better as the S & P 500 is back above its 50-day moving average and history suggests that rapid drawdowns like the recent one don't last, Lee said. Finally, the long-time market bull said pricing indicates only short-term damage. Futures tracking the Cboe Volatility Index fear gauge show a rise around the April 2 tariff deadline but then a decline after. "Ultimately, while risks remain — primarily around the terms of the tariff deal — the weight of evidence favors resilience and recovery as both monetary policy and market technicals are leaning constructive," Lee said.
