Economist issues dire warning over the ‘catastrophic’ threat to markets

As markets continue to fluctuate between hot and cold, a former economic advisor to President Donald Trump is sharing words of caution for public officials and average Americans alike.

Stephen Moore, a current Heritage Foundation senior visiting fellow in economics, more specifically put an onus on federal budget tax cuts and stock market “panic” heightening an already-sensitive fiscal environment.

“The one thing that would really send the stock market into a bear market slide would be if Republicans agree to raise tax rates,” Moore told Fox News Digital. “That would be catastrophic. It would be a huge mistake for the Republicans to do that. Don’t go there. Republicans were put on this Earth to cut tax rates, not raise them.”

He expanded: “This is a president who is gonna get the policies right. He got them right in his first term. We saw a booming market… but people tend to panic when the stock market falls like it has in the last couple of months. And then they make the biggest mistake that you can make, which is they sell their stocks at a low price.”

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Stocks remain volatile, despite three straight days of gains, after China said there are no ongoing talks with the U.S. on tariffs. White House press secretary Karoline Leavitt recently said on Fox News that “there will be no unilateral reduction in tariffs against China… The president has made it clear, China needs to make a deal with the United States of America… And we are optimistic that will happen.”

What’s more, Republicans and President Trump are pushing to approve a bill to reauthorize his 2017 tax cut package. Otherwise, those taxes expire later this year, and rates for nearly every American will spike if Congress doesn’t act within the next few months.

“There’s been some chatter on raising the corporate tax rate or raising the personal income tax rate, which has been paid by all the small businessmen and women,” Moore said. “So, I would be concerned about that, although I think we put out that fire. But, stay tuned.”

“Donald Trump is probably the most pro-business and pro-America president we’ve had in modern times. So we’re gonna see this stock market roar back to life sometime in the next few months,” the economist continued.

“People sometimes get panicked, and they do exactly the wrong thing,” Moore also noted, “and I’m not saying the stock market isn’t going to fall some more, it certainly could. What I’m saying, if you’re invested for the long term, which I say is more than two, three, four, five, six years, then you want to be in this market, because it is gonna spring back to life.”

During Trump’s first presidential term, he signed trade policies with tariffs on foreign aluminum and steel and led the negotiation of trade agreements with Mexico, Canada, China, Japan and South Korea, passed the largest tax reform package in history, and made improvements to the Keystone XL and Dakota Access pipelines.

These parallel initiatives to the president’s now-second term “will pay off,” Moore assures.

“I think Americans should see this, as Donald Trump describes, as some short-term pain to get better trade deals with other countries. And if he’s able to pull this off, and I think he will, I think you’re gonna see a big springback in the market, a real boom and a bullish market over the next couple of years,” he said.

“Trade disputes could go on for another few months. So it’s gonna be a rocky road,” Moore admitted, “but I think at the end of the day, it’ll pay off. Remember when Trump was president in his first term, the Dow Jones in four years was up 60%, the S&P 500 was up 70%, and the Nasdaq was up over 100%. So he has a track record of having an agenda that’s very positive for investors and for companies.”

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Fox News’ Chad Pergram and Ashlyn Messier contributed to this report.