- Speculation has increased that President Trump may be deliberately slowing the economy through tariff policies and market disruption in order to pressure the Federal Reserve into lowering interest rates, a strategy some economists liken to a “J-curve” reset. While Trump has publicly denied intentionally crashing the market, his social media activity and administration rhetoric have fueled debate about whether short-term economic pain is part of a broader plan for long-term gain.
Since President Donald Trump took office in January, stock market performance has dropped so dramatically because of his tariff plan that speculation has veered into whether the White House may actually be trying to slow economic activity on purpose.
At first, many dismissed this as conspiracy: This is a president who values the stock market’s opinion of him, who is an entrepreneur himself, and who campaigned on promises of a prosperous economy for Americans.
However, as stocks continue to nosedive and President Trump’s administration seems reasonably comfortable with that fact, analysts are beginning to wonder if the “hard reset” theory has some truth to it.
President Trump has even hinted at the notion himself. Over the weekend, Trump reposted a video on his social media platform Truth Social titled “Trump is purposefully CRASHING the market” without adding any further comment.
The video, first posted on Elon Musk’s platform X, claims Trump is trying to engineer a cash push into Treasuries, which could result in the Fed feeling pressure to slash interest rates as the economy slows.
Data does support the video’s theory to some extent. Namely, Treasury yields (interest on the Treasury) have collapsed as prices have risen, prompted by rising demand.
Moreover, Trump has made no attempt to hide the fact that he wants interest rates to come down; in fact, he even said Fed Chairman Jerome Powell’s job was on the line if he didn’t do so.
It’s worth noting that the Oval Office does not have the power to fire the Federal Reserve chairman, and Powell and the Federal Open Market Committee (FOMC) are federally mandated to act independently of the government.
Investors question the existence of a Trump master plan
Some analysts are beginning to warm to the idea that President Trump might be trying to orchestrate a slowdown of the economy to rebuild it with lower interest rates and inflation.
This is what some economists call a J-curve, a period of short-term slowdown that leads to a massive takeoff.
“I don’t think the administration is aiming for a bear market or a sharp economic recession,” Kevin Ford, FX and macro strategist at Convera, told Fortune last week.
“But if deflating financial asset bubbles is the price to pay, it seems like they’re willing to take the heat. Their rhetoric feels unified. Trump, Lutnick, Bessent: They’re all aligned on the message of short-term pain.
“If the goal is a J-curve economic trajectory, where a hard reset shocks the system to cool down the economy, it doesn’t look like a recession is the endgame.”
But Paul Donovan, chief economist at UBS, doesn’t see evidence of a master plan at play.
He said in a note on Monday: “Over the weekend, U.S. administration officials gave contradictory statements on trade taxes, causing investors to question the existence of a master plan.
“Attempts to justify attacks on the Heard Island penguins only emphasized the peculiarity of the tariff formula. U.S. President Trump took time from their golf weekend to twice post that equity declines were ‘on purpose.’”
Briefings—including from the president himself—this weekend sought to distance the Trump administration from the notion the markets are being deliberately damaged.
Kevin Hassett, White House National Economic Council director told ABC’s This Week over the weekend: “He’s not trying to tank the market. He’s trying to deliver for American workers.”
Trump also told media aboard Air Force One this weekend that the notion of him trying to engineer a market cooldown is “so stupid.” He added: “I don’t want anything to go down, but sometimes you have to take medicine to fix something.”
And down the market has gone.
At the time of writing, the FTSE is down 10% in the past five days, the S&P 500 down 8.2%, and the Nasdaq down 8.5%.
The White House did not immediately respond to Fortune’s request for comment.
