Senate Republicans are increasingly concerned that President Trump’s ongoing trade war and his tariffs could lead to a major downturn in the U.S. economy and even cause a stock market crash. These worries are rising as Republican lawmakers hear from business owners, farmers, and local leaders who are feeling the effects of the uncertainty surrounding Trump’s tariff policies.
Many businesses are becoming less confident about expanding or hiring new workers because they are unsure about the costs of imported goods and the potential loss of foreign markets. The threat of steep tariffs on Canada, Mexico, and Europe has created a chilling effect on business sentiment in the U.S.
Sen. Susan Collins (R-Maine) expressed concern about how tariffs on Canadian goods could hurt the economy in Maine, particularly in border communities. “The Canadian tariffs will definitely have a detrimental impact on the economy of Maine and on border communities in particular,” she said. She explained that a major paper mill in Northern Maine that gets its pulp from Canada could be devastated by a 25-percent tariff. “That mill alone, which is by far the biggest employer in the region, employs 510 people directly,” Collins added.
Despite Trump’s recent decision to pause the 25-percent tariffs on Canada and Mexico until April 2, Collins said the threat of high tariffs is still having a negative impact on Maine’s economy. “I think it freezes investment until they know exactly what the impact is going to be,” she said.
Sen. Rand Paul (R-Ky.) also voiced concerns over the economic impact of Trump’s tariffs, pointing out that industries in Kentucky are lobbying against the trade policies. “I have every major industry in Kentucky lobbying me against them: the cargo shippers, the farmers, the bourbon manufacturers, the homebuilders, the home sellers,” he said. Paul also mentioned that the bourbon industry, which was hurt by retaliatory tariffs in the past, continues to face challenges. “The bourbon industry says they’re still hurt from the retaliatory tariffs,” Paul said. “So do the farmers.”
He criticized the reliance on tariffs, noting that the federal government had to spend billions to help farmers in the past. “It shows the fallacy of believing in a policy of tariffs if you immediately have to borrow a bunch of money and give it to the people you’ve hurt,” Paul said.
Some GOP senators worry that if the economy worsens, it could hurt Republicans politically. One anonymous senator expressed fear that Trump’s tariff policies, combined with other factors, could lead to a stock market crash. “People are concerned that we’re about to take a hit in the stock market,” he said.
Indeed, the stock market has faced significant turmoil. Last week, the S&P 500 had its worst week of trading since September, erasing all of the gains made since Trump’s election. The Nasdaq composite also fell into correction territory, and major financial stocks, such as JPMorgan and Bank of America, experienced some of the largest losses.
Another Republican senator suggested that the market turmoil might prompt Trump to reconsider his approach to tariffs. “Maybe if his approvals keep diving and the economy starts to pinch, maybe Trump will shift on tariffs,” the senator said. “But in the meantime, what damage are we doing?”
The uncertainty surrounding tariffs has also raised concerns about the broader economy. The Labor Department reported that the U.S. economy added only 151,000 jobs in February, below the 170,000 jobs that economists had expected. The unemployment rate also ticked up slightly, from 4 percent to 4.1 percent. Private employers hired just 77,000 workers in February, the smallest increase since July.
Federal Reserve Chair Jerome Powell acknowledged that while the economy is still strong, there is “high” uncertainty about the economic impacts of Trump’s trade policies. He noted that tariffs could hurt various sectors, including exporters, importers, retailers, and consumers. The Atlanta Fed’s GDPNow tracker also projected a 1.5 percent shrinkage in the economy during the first quarter.
Consumer confidence also took a hit in February, dropping to its lowest level in 15 months. Many Americans are concerned about the effects of inflation and Trump’s tariffs on their purchasing power.
Despite the concerns, Trump has remained dismissive of the stock market’s downturn. “I’m not even looking at the market because long-term, the United States will be very strong with what is happening here,” Trump said.
Sen. Mike Rounds (R-S.D.) acknowledged that South Dakota farmers are still strong Trump supporters but are growing increasingly worried about the impact of tariffs on their businesses. “Most of them are saying, ‘We get it. We don’t like the idea. You need to talk to him about what tariffs are going to do,’” Rounds said. He added that farmers are urging lawmakers to take the concerns seriously.
Rounds is optimistic that the market could recover if Trump focuses on reducing the deficit and bringing down interest rates. “Once we get some stability, I think the market is going to come back again,” he said.
Sen. John Cornyn (R-Texas), whose state has significant trade with Mexico, also hopes that the uncertainty around tariffs will soon be resolved. “I think a lot of the pro-growth things that the president is doing on energy and regulation will have a huge pro-growth impact,” Cornyn said. However, he stressed that markets prefer stability over uncertainty.
With so many moving parts, Senate Republicans are watching closely to see how Trump’s tariff policies affect the economy and whether they could lead to a serious stock market crash.
