Paul Tudor Jones: Stock Market Headed to New Lows on Tariffs, Fed Policy

The U.S. equity landscape faces considerable headwinds, and according to distinguished investor Paul Tudor Jones, the market may not have seen its lowest point. He highlighted a potent combination of Federal Reserve inertia and the current administration’s tariff-centric approach as creating a bearish outlook for stocks.

Speaking on CNBC, Jones, founder of Tudor Investment, articulated his perspective: “It’s pretty clear to me. You’ve got Trump focused on tariffs. You’ve got the Fed focused on not cutting rates. That’s not good for the stock market.” He projected that equities are “probably going down to new lows, even as Trump cuts China [tariffs] to 50%.”

Trade Tensions and Market Volatility

Jones’ comments arrive amidst significant Wall Street turbulence, triggered by President Trump’s announcement of tariffs reaching up to 145% on Chinese imports – the most substantial such measures since the 1960s. This move prompted an immediate sell-off, significantly impacting the S&P 500 (SPY). While the index has since recovered some losses, it remains approximately 8% below its all-time high.

In retaliation, China implemented its own tariffs of 125% and recently indicated a willingness to reconsider trade negotiations with the U.S. The key figures in this trade dispute are summarized below:

Tariff Action	Rate / Detail
U.S. Tariffs on Chinese Imports (Announced by President Trump)	Up to 145%
China’s Retaliatory Tariffs on U.S. Goods	125%

However, despite these tentative signs of de-escalation, Jones believes considerable macroeconomic damage has already occurred. “He’s going to drop them [tariffs on China] to 50% or 40%, whatever it is. Even when he does that… it would still be the largest tax increase since the 60s,” Jones stated, estimating a potential 2% to 3% reduction in growth as a consequence.

Monetary Policy and the Elusive Market Floor

A core issue, according to Jones, is the lack of support from either monetary or fiscal policy. The Federal Reserve has kept its benchmark interest rate steady in the 4.25% to 4.5% range since December. Fed Chair Jerome Powell has consistently stated a preference for more clarity on the trade war’s impact before considering rate adjustments.

Jones elaborated, “Unless they [the Fed] get really dovish and cut rates significantly, we’re probably going to see new lows. And when we’re at those new lows, that’s when the real test begins, and that will likely prompt action from both the Fed and President Trump. Then we’ll get some kind of reality check.”

A Voice of Experience

Paul Tudor Jones is renowned for famously predicting the 1987 stock market crash, a call that established him as one of his generation’s most influential investors. Beyond heading his investment firm, he also chairs Just Capital, a non-profit organization evaluating U.S. companies on social and environmental metrics.

His current warnings emerge as many analysts debate whether the market has fully priced in the consequences of the ongoing trade dispute. While the S&P 500 (SPY) has shown some recovery, it continues to be weighed down by unclear U.S. economic policy direction and weaker growth data. Jones’ pronouncements could rekindle concerns about a renewed bearish trend, particularly if U.S.-China trade talks stall or if the Federal Reserve maintains its firm policy stance despite clear signs of macroeconomic weakening.