In a recent interview, President Donald Trump highlighted the success of his first term by referencing the stock market.
“I felt a great sense of pride in passing on the country with the stock market at a higher level than it was before the pandemic hit,” he stated during a Fox News interview on February 9. “It was an extraordinary achievement.”
Looking ahead to his second term, he assured that this positive trend would persist.
“The stock market is going to thrive,” he announced to attendees at an investor conference on February 19.
However, following a significant market decline last week due to concerns that Trump’s tariff policies might lead the United States into a recession, his rhetoric shifted.
“You can’t really keep an eye on the stock market,” Trump remarked in a Sunday Fox News interview. “When you look at China, they have a long-term view. We focus on quarterly results.”
On Monday, stocks dropped further, wiping out all gains since Trump’s election. The S&P 500 experienced its worst day since September, and technology stocks suffered the most significant losses, with the Nasdaq recording its largest single-day decline since 2022 and losing $1 trillion in value.
Despite the market turmoil, Trump’s Truth Social account had no posts regarding the market downturn on Monday. A White House official attempted to minimize the significance of the market fluctuations in a statement to the press.
“Since President Trump took office, business leaders have reacted positively to his America First economic agenda of tariffs, deregulation, and promoting American energy, resulting in trillions of investment commitments that will generate thousands of new jobs,” said White House spokesman Kush Desai in a statement. “President Trump achieved historic growth in jobs, wages, and investments in his first term, and he is poised to do so again in his second term.”
The White House cited multiple surveys indicating increased confidence among business leaders, although these surveys were conducted prior to Trump’s recent tariffs on Canada and Mexico.
During his first term, Trump often used the stock market as a measure of his presidency’s health, with posts such as “Stock Market at all-time high. That doesn’t just happen!” At rallies, he frequently mentioned the stock market and how workers expressed gratitude for the rise in their stock portfolios.
The stock market saw ups and downs in Trump’s first term, including a sharp decline at the pandemic’s onset, but generally exhibited an upward trend, with the S&P 500 increasing nearly 70%. The market continued its upward trajectory during President Joe Biden’s administration.
On the eve of Trump’s inauguration, when the S&P 500 had risen about 3% since the election, he referred to this stock increase and other economic improvements as the “Trump effect.”
“Everyone is calling it the — I don’t want to sound boastful, but let’s say it anyway — the Trump effect. It’s you. You’re the effect,” Trump proclaimed at a rally. “Since the election, the stock market has surged, and small-business optimism has increased dramatically by 41 points to a 39-year high. Bitcoin has shattered numerous record highs.”
Yet, as Trump’s policies began to take shape within his first 50 days in office, some of the investor optimism started to wane. The decline in markets intensified last week when Trump followed through on threats to impose a 25% tariff on imports from Canada and Mexico, two key American trade partners, along with an additional 10% tariff on Chinese goods.
Although Trump retreated on many of the Canada and Mexico tariffs shortly after, many levies remained in place, and he reiterated that further tariffs would be implemented in April. On Monday, China announced its own retaliatory tariffs on a range of U.S. agricultural products, while Ontario’s premier indicated the province would hike electricity costs for 1.5 million Americans by 25%.
U.S. tariffs on imported steel and aluminum are slated to take effect later this week, which would elevate costs for some American manufacturers.
“The fundamental aspects of the economy are truly strong. However, there is unfortunately a considerable amount of uncertainty impacting boardrooms and investors,” stated Peter Orszag, CEO of Lazard investment bank and former top budget official in the Obama administration, in an interview with CNBC. “While people can understand the tensions with China, the approach towards Canada, Mexico, and Europe remains confusing. The positive aspect is that this is a choice.”
Trump has not dismissed the possibility of economic challenges resulting from his tariffs, acknowledging in a Fox News interview on Sunday that there would be a “transition period” and a “minor disturbance” in his congressional address last week.
His economic advisors also issued warnings last week, with Treasury Secretary Scott Bessent indicating there would be a “detox period” as the economy adjusts away from government spending, while Commerce Secretary Howard Lutnick mentioned that certain prices would rise due to tariffs, although they wouldn’t lead to an overall increase in inflation.
On Sunday, Trump reaffirmed his stance on tariffs while addressing reporters as he returned to Washington from his weekend stay in Palm Beach, Florida.
“I believe the tariffs are going to be the best decision we’ve ever made as a nation,” Trump remarked. “They will make our country prosperous again.”
