When President Donald Trump wanted to make the case for his first term’s success in an interview last month, he turned to the stock market.
“I was very proud to have handed over the country when the stock market was higher than it was, previous to the pandemic coming in,” he said in a Fox News interview Feb. 9. “It was an amazing achievement.”
And in his second term, he has promised that trend would continue.
“The stock market is going to be great,” he told the crowd at an investor conference Feb. 19.
But after stocks began a downward spiral last week on fears Trump’s use of tariffs will tip the United States into a recession, his tone has changed.
“You can’t really watch the stock market,” Trump said in an interview that aired Sunday on Fox News. “If you look at China, they have a 100-year perspective. We have a quarter. We go by quarters.”
On Monday, stocks sank further, erasing all of their gains since Trump’s election. The S&P 500 had its worst day since September, and shares of technology companies were among the hardest hit as the Nasdaq had its biggest one-day drop since 2022, wiping out $1 trillion in value.
None of the more than two dozen posts on Trump’s Truth Social account Monday addressed the market sell-off. A White House official downplayed the market moves in a statement to reporters.
“Since President Trump was elected, industry leaders have responded to President Trump’s America First economic agenda of tariffs, deregulation, and the unleashing of American energy with trillions in investment commitments that will create thousands of new jobs,” White House spokesman Kush Desai said in a statement. “President Trump delivered historic job, wage, and investment growth in his first term, and is set to do so again in his second term.”
The White House cited several surveys showing improved confidence among business leaders, though the surveys were conducted before Trump imposed the tariffs on Canada and Mexico last week.
After Trump’s first term in office, he frequently used the stock market like an EKG tracking the health of his presidency with posts like “Stock Market at all-time high. That doesn’t just happen!” At rallies, he would often cite the market and talk about workers’ thanking him for making them rich because their stock portfolios were doing so well.
While the stock market had its ups and downs during Trump’s first term, including a dramatic fall at the start of the pandemic, it was largely on an upward trajectory, with the S&P 500 index increasing nearly 70% during Trump’s first term. The market continued its overall rise during President Joe Biden’s time in office.
On the eve of Trump’s inauguration, when the S&P 500 was up around 3% since the election, he referred to the increase in stocks, along with other improvements in the economy, as the “Trump effect.”
“Everyone is calling it the — I don’t want to say this, it’s too braggadocious, but we’ll say it anyway — the Trump effect. It’s you. You’re the effect,” Trump said at a rally with supporters. “Since the election, the stock market has surged, and small-business optimism has soared a record 41 points to a 39-year high. Bitcoin has shattered one record high after another.”
But as Trump’s policies have begun to take shape in his first 50 days in office, some of that optimism from investors has reversed course. The decline in markets accelerated last week, when Trump carried through on a threat to impose a 25% tariff on goods from Canada and Mexico, two of America’s closest trading partners, and put an additional 10% tariff on imports from China.
While Trump backed off on many of the Canada and Mexico tariffs days later, the levies remained on many products, and he reiterated that more tariffs were coming in April. On Monday, China imposed retaliatory tariffs on a variety of U.S. agriculture products, while Ontario’s premier announced the province would begin charging 25% more for electricity to 1.5 million Americans.
U.S. tariffs on imported steel and aluminum were set to go into effect later this week, which would drive prices higher for some U.S. manufacturers.
“The underlying fundamentals of the economy are really strong. There is unfortunately a huge amount of uncertainty right now that is affecting boardrooms and investors,” Peter Orszag, CEO of the investment bank Lazard and a top budget official in the Obama administration, said in an interview on CNBC. “I think people could understand tension with China. It’s Canada, Mexico and Europe that is confusing. So the good news is this is a choice.”
Trump hasn’t dismissed the notion of some economic pain from his tariffs, warning that there will be a “period of transition” in his interview Sunday on Fox and a “little disturbance” in his address to Congress last week.
His top economic officials also offered a warning last week, with Treasury Secretary Scott Bessent saying there would be a “detox period” as the economy shifts away from government spending and Commerce Secretary Howard Lutnick saying prices on some items would go up as a result of tariffs — though they wouldn’t increase overall inflation.
On Sunday, Trump maintained his position on the tariffs in remarks to reporters as he flew back to Washington from a weekend at his home in Palm Beach, Florida.
“I think the tariffs are going to be the greatest thing we’ve ever done as a country,” Trump said. “It’s going to make our country rich again.”
