Here’s how long Trump has to negotiate on tariffs — or risk serious damage to stocks and the U.S. economy

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U.S. stocks tallied their worst day since 2020 on Thursday as roughly $3.5 trillion in value evaporated.

And as investors fretted about the risk that Trump’s aggressive approach toward tariffs could spark a global trade war, some on Wall Street said they were surprised that the market wasn’t taking an even bigger hit.

“It is surprising that equity prices are not down more,” said Neil Dutta, chief economist at Renaissance Macro. “Perhaps this means investors believe negotiations are in store to bring down tariff rates later. I am not so sure.”

The expectation that the Trump administration will cut deals with trade partners to reduce or eliminate the tariffs announced on Wednesday appeared to be investors’ last, best hope for the U.S. economy to avoid a recession — and a bear market in stocks along with it.

According to a model cited by Dutta, investors already appeared to be pricing in a nearly 90% chance of a recession arriving some time over the next 12 months.

Things were looking dire on Thursday, but some apparently were holding out hope for a resolution that would minimize the economic blowback. In any case, investors would likely need further evidence of slowing growth before sending stocks even lower.

“Things can get worse, but it is worth noting that we have already fallen quite a bit. I could see a scenario where stocks hold up and then fall as growth scare becomes a reality,” Dutta said.