Unlike in his current term, Trump back then didn’t immediately launch a trade war. He devoted his first year as president to easing business regulation and getting a historic tax cut through Congress. CEOs were jubilant. But then, in January of his second year, he showed why he had declared himself Tariff Man. He imposed tariffs on China and then quickly broadened tariffs to more countries. The party was over. Specifically:

Tariffs helped a few U.S. companies but also injured thousands of others. For example, Trump imposed tariffs on imported steel—great for the handful of U.S. steelmakers but a painful cost increase for the thousands of U.S. manufacturers that use steel. Expand the steel example across the economy and the result was a hard punch to profits. During Trump’s first year in office (2017), before he imposed tariffs, U.S. corporate profits rose 8%. In the following five quarters, with tariffs, profits lurched into reverse, shrinking 1.5%, annualized.

Stock prices got whacked. From Trump’s 2016 election until tariffs began in January 2018, the S&P 500 rose at a 27.3% annualized pace. But with tariffs added, the S&P rose at just 3.8% annualized (January 2018 to November 2019).

CEOs reversed their view of Trump. Immediately after Trump won in 2016, bosses raised their confidence as measured by the Conference Board, and confidence varied slightly up and down around that new level during Trump’s first year in office. But soon after he declared his trade wars, CEO confidence plunged to levels not seen since the worst days of the financial crisis in 2008-09.

Note that Trump is executing his main economic policies in the reverse order he followed in his first term. Back then he got the tax bill done first, then turned to tariffs. Now, having declared a historic trade war, he will spend much of 2025 on that tax bill, many elements of which are scheduled to sunset on December 31. He will try to keep that bill’s tax cuts and even cut taxes further. If he succeeds, he might regain his currently ebbing support from business leaders, investors, and consumers. But that’s a big “if” and a big “might.” — Geoff Colvin

More news below.

Contact CEO Daily via Diane Brady at diane.brady@fortune.com

Top news

• Stocks suffered their biggest one-day drop since 2020 on Thursday. The S&P 500 was down nearly 5%. In Asia this morning, indexes in Japan dropped 3%. Europe followed, with the Euro Stoxx 600 losing 2% from the get-go. Pre-market bets on S&P 500 futures this morning predicted more losses at the opening bell.

Trump Tariffs vs. Smoot-Hawley. How do President Trump’s new tariffs compare to the Smoot-Hawley tariff law, which is widely believed to have exacerbated the Great Depression? According to analysis by veteran Fortune reporter Shawn Tully, they are much worse. 

Global recession: JPMorgan raised its estimate of whether there will be a global economic recession this year to 60% in a note to clients titled “There will be blood.” “This year’s ~22%-point tariff increase would be the largest US tax hike since 1968. Tariff shock to be magnified by retaliation, supply chain disruptions, and a sentiment shock. The risk of recession in the global economy this year is raised to 60%, up from 40% earlier,” wrote Bruce Kasman and his team.

El-Erian speaks: Allianz Chief Economic Advisor Mohamed El-Erian chimed in this morning: “I don’t think [a U.S. recession] is inevitable because the structure of the economy is so strong, but the risk has become uncomfortably high.”

The WTO forecast a 1% contraction in global trade this year.

What Trump says: “I think it’s going very well—The MARKETS are going to BOOM…,” he wrote on social media. 

Say goodbye to the $1,000 iPhone. Apple stock declined 9.25% yesterday. Much of its supply chain is now trapped behind Trump’s Asian tariff wall. Wedbush analyst Daniel Ives and his team were typically pithy about the logistical nightmare now facing the company: “For U.S. consumers the reality of a $1,000 iPhone being one of the best made consumer products on the planet would disappear. It speaks to our point that if consumers want a $3,500 iPhone we should make them in New Jersey or Texas or another state....the concept of making iPhones in the U.S. is a non-starter in our view at $1,000.”

Polls may be shifting against Trump. Although the president has had relatively good approval ratings so far, FT data guru John Burn-Murdoch says the tide may be shifting against him. “This week, just before the tariff chaos, 63 per cent of Americans had a negative view of the government’s economic policy, comfortably the highest figure since records began almost 50 years ago,” he says.

U.S. manufacturers are “bracing” for rising material costs under Trump’s tariffs. Jay Timmons, head of the National Association of Manufacturers, said, “In any scenario, it’s going to add cost to manufacturers, especially for those inputs that are coming into the United States for finished goods and already finished products.”

Walmart and Costco are avoiding tariff-related slumps. While the stock market fell sharply on Thursday following the tariff announcements, Walmart and Costco avoided big hits to their share prices. That’s because the retail giants are able to dump higher costs on their suppliers and keep prices low where rivals like Target and Macy’s can’t.

AI makes inroads. Indeed CEO Chris Hyams revealed that “roughly two-thirds” of the jobs posted on the employment platform require skills that AI already possesses. Still, Hyams says that there are no jobs on Indeed that an AI can do completely.

From the analysts

• UBS on tariffs: “If there is no retreat, markets will price a US recession. If there is a retreat, markets will assume US growth will weaken,” per Paul Donovan.
• JPMorgan on tech hardware makers: “We estimate a ~10% headwind to gross profits for Hardware companies, without assuming price increases likely from companies to offset the headwinds. ... We estimate an average ~5% price increase across Hardware,” per Samik Chatterjee et al.
• Convera on “the worst case scenario”: “This is the highest average US tariff rate in more than a century, and surpasses the infamous 1930 Smoot-Hawley tariffs, which arguably worsened the Great Depression. This is a major shock to the world economy and close to the worst-case scenario Trump had threatened on his campaign trail. It will prompt retaliatory measures from trading partners and although there may be room for negotiation, high tariffs and lingering uncertainty raise recession risks,” per George Vessey.
• Oxford Economics on recession risk: “The Oxford Economics' Global Economic Model has US GDP growth at 1.4% and core inflation rising to 3.9% this year, compared with 3.1% in the baseline. The US avoids a recession but becomes dangerously vulnerable,” per Ryan Sweet.
• HSBC on China: “Total US tariff of 54% on China could reduce growth by c1.5ppt in Asia's largest economy; We anticipate more urgency to bolster domestic demand,” per Frederic Neumann and Justin Feng.

Around the watercooler

‘Oh really? Oh s—.’ CEO reacts live to tariff-based stock plunge on earnings call by Chris Morris

In the reeling energy sector, an unexpected OPEC production hike plus tariff fears send oil prices plunging 7% by Jordan Blum

Tariffs mean an economic hit for U.S. firms—but also confusion and paperwork by Jeff John Roberts

Trump’s tariff numbers appear to have been calculated through a simple math formula, which works with every single country on the list by Paolo Confino

Ford tries to ease tariff pain with a new offer: Employee prices for everyone by Sheryl Estrada