The past week has been exceptionally challenging for the stock market, with last Thursday and Friday marking an unprecedented downturn. This significant decline, measured by the loss of shareholder value, represents the worst two-day market crash in history, leaving investors and analysts in shock.
When utilizing various metrics, the recent turmoil in the market can be compared to historical financial crises such as the bursting of the dot-com bubble, the 2008 financial crisis, or the impacts of the COVID-19 pandemic in 2020. Each of these events reshaped the economic landscape and had lasting effects on investor confidence.
However, unlike previous market disruptions, the recent events dubbed Donald Trump’s “Annihilation Days” appear to be heavily influenced by the unpredictable actions of one individual who often misinterprets economic principles. This raises questions about the stability of the market and the factors influencing investor sentiment.
It is likely that Trump would not have imposed a series of tariffs on our trading partners (and even on some uninhabited territories) if he did not genuinely believe that these actions would yield positive outcomes for the economy, or at least serve his personal interests. Numerous analyses and expert opinions highlight that such tariffs are unlikely to revive U.S. manufacturing jobs and could lead to dire long-term economic consequences.
Instead of revisiting the economic arguments surrounding tariffs, it is more pertinent to examine the spread of right-wing disinformation emerging from various news sources. Some claim that driving the stock market into a downturn was part of Trump’s grand strategy all along, which distorts the reality of the situation.
This downturn was not a premeditated plan by Trump. Evidence suggests that he campaigned on the belief that he would significantly bolster the stock market compared to his opponent. In October, Trump expressed that if he lost the election, “the market would go down the tubes,” indicating that he anticipated a thriving market under his administration.
Throughout his tenure, Trump frequently predicted that the stock market would thrive during his presidency, only to later dismiss the strong performance of the market under Biden as a byproduct of an anticipated Trump victory. This pattern of behavior reflects a fundamental misunderstanding of market dynamics and investor psychology.
Recently, while the stock market was experiencing a sharp decline, Trump posted a video on his controversial Truth Social platform, suggesting that he was intentionally causing the market to fall as part of his broader economic strategy. However, two days later, the director of Trump’s National Economic Council publicly refuted those claims, stating, “He’s not trying to tank the market,” which adds to the confusion about Trump’s true intentions.
Let’s not forget that the stock market was already experiencing difficulties prior to last week’s events. I previously discussed a more moderate market downturn caused by Trump about a month ago. It appears as though Trump believed that his erratic decisions would positively influence the markets, but now that it’s evident they have not, he resorts to making excuses, a behavior we have seen time and again.
Imagine for a moment that Trump’s supporters are correct in asserting that large, indiscriminate tariffs would ultimately serve as an economic boon. If that were the case, why would the stock market react so negatively to the announcement of new tariffs? While the stock market is not the most long-term predictor of economic health, it generally responds favorably to news that traders believe will positively impact the economy over time. Stocks tend to rise when there’s a broad consensus that the underlying companies will increase in value in the future.
The assertions that Trump intentionally crashed the stock market or that this was part of an overarching economic strategy are unfounded. The idea that he has a comprehensive economic plan is fundamentally flawed. His approach, resembling a presidency characterized by random upheaval, does not appear to be yielding positive results.
Trump had envisioned that the stock market would soar during a second term, frequently voicing this belief. Now that he is facing the reality of a market decline, he and his most fervent supporters are attempting to rewrite history to align with their narrative.
Jonathan Wolf is a civil litigator and the author of Your Debt-Free JD (affiliate link). With experience teaching legal writing and contributing to various publications, he has made it his mission to be both financially and scientifically literate. The views he shares are his own and should not be attributed to any affiliated organizations. For inquiries, he can be reached at jon_wolf@hotmail.com.
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