The $25 billion that retreated from U.S. equities in the one-week period ended Wednesday March 21 looks like a signal that much worse could come as investors scramble on fears of a trade war escalated by President Donald Trump's protectionist agenda, as highlighted by Bloomberg in a story on March 22

Concerns over tightening monetary policy and overall geopolitical uncertainty injected a wave of volatility into the nine-year bull market earlier in 2018. As President Trump signs executive orders such as new tariffs of at least $50 billion on Chinese imports, investors feel their fears have been confirmed. 

Trump Protectionism Viewed as Negative

Nearly two-thirds of respondents in a recent CNBC survey see Trump's trade policies as negative for overall economic growth, serving as bad news for stocks as they likely continue on their downward spiral following this week's sell-off. 

As a result, the market has again been dragged into correction territory, mounting more losses to the $25 billion that flowed out of U.S. stocks in the week through Wednesday. To add to this week's woes, the Federal Reserve announced an increase in the benchmark lending rate by a quarter point, expecting a steeper path of hikes over the next two years on an improving economic outlook. 

"I’m glad Americans got those massive tax cuts, because we just lost it all in the stock market,” said Chris Rupkey, chief financial economist at MUFG Union Bank in New York, of the GOP tax overhaul which reduced tax rates for some Americans as well as many of the most powerful corporations in industries such as healthcare, tech and industrials. 

"Tariffs mean a trade war, and the news has the world's investors running for the exits," Rupkey warned in a statement quoted in a Bloomberg story published March 23. (See also: Trump ‘Very Serious’ About 'Phase 2' of Tax Cuts.)

Bloomberg's Matthew Burgess, Sarah Ponczek and Elena Popina highlighted the shifting sentiment of equity bulls, once fueled in their optimism by the election of pro-business President Trump. The story noted that overnight trading in futures fell as much as 1% before paring the loss on concerns over Trump's trade decisions. The S&P 500 has fallen nearly 4% over the most recent five days, bringing its year-to-date (YTD) loss to 1%. 

Jim Paulsen, chief investment strategist at Leuthold Weeden Capital Management, echoed the bearish sentiment. “You have a market which has been vulnerable for a while," he said. "You pull that together with the trade war with arguably the second most-powerful country in the world. Then you combine it with the fact that it happened one day after Fed signaled two more hikes this year.”

Ultimately, as a variety of factors led by Trump's antagonistic trade policies threaten global market stability, we should see more bulls turn bearish, and the market sink further as a result. (See also: Tech Bubble Burst Could Reach Beyond Equities: Nomura.)