Wall Street Banks Shake Off Trump’s Tariff Turbulence, Clients Follow Suit

Wall Street Banks and Clients Adapting to Trump's Tariff Uncertainty

Wall Street's major banks are signaling a shift toward resilience amid President Trump's ongoing tariff policies, with executives emphasizing that both they and their corporate clients are increasingly accepting trade volatility as a new normal and proceeding with business activities like mergers, debt issuance, and IPOs.

 This adaptation follows initial market chaos after Trump's April 2, 2025, "Liberation Day" tariff announcement, which triggered sharp selloffs and uncertainty. However, recent earnings reports from Q2 2025 (April-June) show banks benefiting from the resulting volatility, particularly in trading desks, while investment banking rebounds unevenly.

 Bank leaders describe this as moving from a "pause" to renewed confidence, aided by new trade pacts and regulatory easing under the Trump administration.

Executive Insights and Client Adaptations

Top executives from major banks, during their mid-July 2025 earnings calls, highlighted a growing acceptance of tariff-related risks:

• Morgan Stanley CEO Ted Pick: Noted that "boardrooms appear more accepting of ongoing uncertainty broadly," describing Q2 as a "tale of two quarters" with a slow April followed by a strong pickup in activity.

• Citigroup CEO Jane Fraser stated that volatility "is going to, I suspect, be a feature, not a bug of the new world order, and we will benefit from that."

• Goldman Sachs CEO David Solomon explained that a "narrower range of outcomes on global trade for clients sealed their confidence and willingness to transact."

• Bank of America CEO Brian Moynihan: Observed that "our clients continue to see clarity with the changes in trade and tariffs" and expect them to "start to understand the future and behave accordingly."

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• Bank of America CFO Alastair Borthwick added that "April was just really slow," with M&A deals being smaller in size.

They are reportedly factoring in tariffs through hedging strategies, supply chain adjustments, and proceeding with deals despite the noise, buoyed by progress in negotiations with countries like India and Indonesia.

 This contrasts with earlier fears of a dealmaking freeze and recession risks voiced in Q1 earnings.

Impacts on Bank Performance

The tariff-induced market swings have proven lucrative for trading operations, as investors adjusted positions amid volatility. Here's a breakdown of Q2 2025 results for key banks (collective data for Goldman Sachs, Morgan Stanley, Bank of America, Citigroup, and JPMorgan Chase):

Bank	Trading Revenue Change (YoY)	Investment Banking Revenue Change (YoY)	Key Notes
Collective (5 Banks)	+17% ($33.8B total)	+7% ($8.7B total)	Volatility boosted trading; uneven IB recovery.
Goldman Sachs	Up (specifics not detailed)	Up	Benefited from trade pacts narrowing uncertainty.
JPMorgan Chase	Up (potential exceedance of guidance)	Up	Strong pickup post-April slowdown.
Citigroup	Up	Up	Volatility seen as ongoing benefit.
Bank of America	Up	-9%	Smaller M&A deals; slower bond underwriting.
Morgan Stanley	Up	-5%	Weaker merger advisory; overall optimism.

Additionally, banks have announced new stock buybacks and dividends after passing Fed stress tests, contributing to record-high stock prices for several firms in early July.

 Analysts like those from Barclays predict continued outperformance in investment banking for banks like Goldman Sachs.

Broader Economic Implications and Future Outlook

The adaptation suggests tariffs are becoming "priced in," potentially mitigating fears of broader economic disruption, though risks like higher inflation or retaliation persist.

 Banks anticipate gains from deregulation, including rollbacks of post-2008 rules, and ongoing volatility as a revenue driver.

 However, earlier reports from April highlighted pain for banks, with tariff chaos contributing to a $700 billion storm in financial services.

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