The wealthiest people in the United States, many of whom own stock in leading global companies, have long benefited from free trade, or the unrestricted exchange of goods and services, Cramer explained.
U.S. presidents and business leaders have also long supported free trade, making deals with other countries to expand global trade.
"President Trump does not share that orthodoxy and it's starting to dawn on the business community that the free ride may be over," Cramer said.
"The combination of corporate tax cuts and repatriation were huge boosts to all the bottom lines of companies, not just the domestic ones," the "Mad Money" host said. "You could sense how much confidence there was when Congress passed the tax bill."
"Sure, the Chinese may steal our trade secrets. Yes, they take our manufacturing jobs, but boy, oh boy, do our companies make money there. Starbucks is huge in China. FedEx is the shipping company of choice for their exports," Cramer said.
Companies like FedEx now feel threatened that the president, determined to revitalize U.S. manufacturing, has potentially thrown their China operations into jeopardy, Cramer explained.
"The idea of a $1 tariff on Starbucks coffee, something I asked CEO Kevin Johnson about, seemed fanciful 18 months ago. Now it seems plausible," he continued. "FedEx planes may be made to sit on the tarmac while Chinese shippers roll on."
So now, after years of Washington and Wall Street favoring free trade, fears of a legitimate trade war are now trickling into the market narrative, the "Mad Money" host said.
"Of course the stock market gets crushed, because nearly everyone with money in this country thinks this policy is lunacy, so they're freaking out and turning seller," Cramer said. "That's what today's breakdown was about."