Following initial record highs post-election, US stocks have lost trillions of dollars amid President Trump’s conflicting statements on tariffs and growing fears of a recession.
While Trump describes the market’s volatility as a temporary “transition” towards economic growth, both supporters and critics of the president speculate, without evidence, that he may intend to intentionally crash the stock market.
Current US Stock Market Situation
Uncertainty, which investors generally dislike, has been created by Trump’s changing economic policies.
The S&P 500 index, which tracks the performance of 500 major US corporations, has fallen by nearly $5 trillion from its peak in February.
On March 10, the tech-focused Nasdaq index dropped by 4%, its worst daily loss since September 2022.
Regardless of Trump’s true intentions, the past month has been marked by elevated levels of uncertainty across different fronts, said Tara Sinclair, director of the George Washington University Center for Economic Research.
The Economic Policy Uncertainty Index, a measure produced by the Federal Reserve Bank of St. Louis based on news coverage of economic policy issues, reached its highest level in February since the peak of the COVID-19 pandemic in 2020.
The Global Economic Policy Uncertainty Index in January hit its highest level on record, excluding May 2020.
Why Some Claim Trump Wants to Crash the Stock Market
Several unproven theories suggest that Trump might seek a stock market crash to make it easier to repay the US’s $36 trillion national debt by lowering interest rates.
Since taking office, Trump has voiced concerns about the national debt and called for the Federal Reserve to lower interest rates.
In a recent FOX News interview, he stated that “nobody ever gets rich when the interest rates are high, because people can’t borrow money.”
With a debt to GDP ratio of approximately 120%, the federal debt is nearing its highest post-World War II level and is costly to service, as the US government spent over $1 trillion on interest payments alone last year.
Some Trump supporters argue that he is deliberately causing economic discomfort to pressure the Federal Reserve into lowering interest rates, which would reduce the cost of refinancing the national debt.
Critics of this approach raise concerns about the independence of the Federal Reserve from the White House and Congress, suggesting that Trump may engineer stock market drops to allow himself and his allies to buy stocks at lower prices.
Is Trump Really Trying to Crash the Stock Market?
While the Trump administration has played down market turmoil, there is no indication that they wish for stock prices to decline.
In the past, Trump has often bragged about the stock market’s performance during his tenure when the market was bullish.
Kathleen Brooks, founder of Minerva Analysis, believes that Trump is not intentionally causing the market to fall.
“The US economy peaked in November, and since then, economic data has trended downward. This doesn’t support the theory of a conspiracy but rather fundamental reasons for the decline,” Brooks said.
Some analysts suggest that the market is overvalued and overdue for a correction, pointing to actions by investors like Warren Buffett, who sold off significant amounts of stock in 2024, hinting that the market might have been overpriced.
