Stanley Druckenmiller sends curt 7-word response to tariff war

The billionaire investor weighed in on the tariff debate.

Apr 7, 2025 - 12:08

Stanley Druckenmiller sends curt 7-word response to tariff war

Everyone is talking about tariffs for a good reason. On April 2, President Trump unveiled widespread tariffs on global imports on "Liberation Day," and the stock market reacted with a thud.

The S&P 500 fell by about 10% through Friday, while the Nasdaq notched back-to-back declines of about 6%. Overall, the S&P 500 and Nasdaq Composite are 17% and 22% lower than at their peak in January. And it's likely to worsen, given that Sunday night futures show another big drop looming on Monday.

Crashing stocks have turned tariffs into a lightning rod, and debate over their benefits and risks is raging. Proponents say tariffs will reignite American manufacturing, while opponents say they'll spark inflation and throw the U.S. into a recession.

The situation has captured the attention of many prominent investors, including legendary hedge fund billionaire Stanley Druckenmiller.

Druckenmiller, who famously broke the Bank of England by shorting the Pound with George Soros in 1992, is one of the best-known investors on the planet. His Duquesne Capital reportedly never had a down year and generated an average annual return of 30% during its nearly 30 years in operation.

Stanley Druckenmiller, chairman and chief executive officer of Duquesne Family Office, weighed in on tariffs.
Bloomberg/Getty Images

Tariffs take a toll on stocks, risk recession

The stock market's drop suggests that, in the aggregate, market participants believe revenue and profit growth is going to shrink.

Sales and profitability are the lifeblood of stock market returns, and expectations for both to increase contributed to the S&P 500 returning 24% in 2024. Coming into this year, most Wall Street analysts, including powerhouses like Goldman Sachs, anticipated more gains, at least partly on hopes for an economy that could continue to reward companies' bottom line.

However, some warning signs are materializing, and those red flags are front-and-center following Trump's proposed tariffs, which include a 10% global tariff on imports, plus tariffs ranging up to 54% on China.

Tariffs are taxes paid by importers like Walmart, automakers, and others. As a result, companies that import goods will pay more, pressuring them to pass increases on to consumers or reduce their profit margin.

Since tariffs are inflationary, they're bad news for consumers who are already pinching pennies because of sticky inflation. Many Americans are also struggling because of sky-high credit card interest rates caused by the Fed's hawkish monetary policy from 2022 through late 2024. As a result, Walmart and other retailers are on record, saying consumers are spending less on discretionary items.

The prospect of higher inflation will likely worsen consumer confidence, which is already poor. The Conference Board's Expectations Index is 65, far south of the 80 level that has suggested past recessions.

The problems are compounded by recent job market weakness. The unemployment rate, while low, has increased to 4.2% from 3.5% in 2023.

In March, 275,000 Americans lost their jobs, according to Challenger, Gray, & Christmas, partly because of Department of Government Efficiency (DOGE) job cuts. The number of layoffs increased a staggering 205% year over year and was the biggest month for layoffs since Covid in 2020.

Stanley Druckenmiller offers short response to tariff war

In January, Druckenmiller suggested in a CNBC interview that tariffs were the lesser of two evils. He pointed out that neither Republicans nor Democrats have made the necessary hard choices to reduce our deficit, leaving the government with a significant need for more revenue.

Druckenmiller said that of the two revenue-generating options available to the U.S. government, tariffs were preferable to income taxes. He argued tariffs should be considered a consumption tax.

On April 6, veteran stock market trader Mark Minervini, who like Druckenmiller was featured in the popular Market Wizards series of books, shared Druckenmiller's CNBC interview in a post on "X," writing simply, "Druckenmiller on Tariffs," above the link.

The social media share sparked a curt response from Druckenmiller, who previously didn't have any other "X" posts displayed on his account.

"I do not support tariffs exceeding 10%, which I made abundantly clear in the interview you cite." wrote Druckenmiller.

The current baseline tariff on imports is set at 10%. However, tariffs are much higher on many important trading partners. For example, in addition to the 54% tariffs on China, tariffs total 25% on Canada and Mexico and 46% on Vietnam. Tariffs on the EU are 20%.

Druckenmiller's terse reply to Minervini suggests he isn't a fan of the current tariff schedule, indicating he would favor broad-based reductions to 10% or lower.