Is Trump crashing markets on purpose?

An interesting theory I heard today is that Trump is deliberately crashing the stock market to force the Federal Reserve’s hand.

Surely not... right?

At first, I dismissed it. But the more I thought about it, the more it started to make sense. During his last term, Trump made it clear he believes lower interest rates fuel economic growth. He regularly pressured the Fed to slash rates, arguing that cheap money boosts investment, supports the stock market, and benefits sectors like real estate, his own turf as a long-time property tycoon.

Fast forward to today, and Trump’s aggressive trade rhetoric and tariff threats have helped send the markets into a tailspin. The Dow, S&P 500, and Nasdaq have all taken heavy hits, especially stocks with exposure to China and global supply chains. It’s sparked geopolitical tension and dented investor confidence.

Then I saw one of Trump’s recent X posts and started wondering—maybe this is part of the plan. Goldman Sachs recently raised its U.S. recession forecast to 35% and now expects the Fed to cut interest rates in July, September, and November. Some traders are even pricing in up to four cuts this year to save the economy.

So, will it work?

Lower interest rates can certainly ease pressure on the economy. They make borrowing cheaper for households, businesses, and importantly, for the U.S. government, which faces massive bond repayments. It also helps Trump-aligned sectors like real estate, where debt costs are crucial. In this light, the strategy seems to be playing out exactly as intended.

But there’s a BIG problem with this theory.

By slapping tariffs on major trading partners, the U.S. risks global isolation. China has already rerouted LNG imports from the U.S. to Australia, while the EU and China explore ways to sidestep U.S. trade routes. That means lost exports, shrinking revenue, and diminished influence.

And investors hate uncertainty. Unpredictable policy, especially around trade, spooks markets and businesses. If companies can’t rely on stable rules, they’ll shift operations elsewhere. That means higher unemployment at home.

Worse, inflation is still elevated. Tariffs drive prices even higher. If the Fed cuts rates into that environment, it could fuel inflation further, weaken the dollar, and inflate asset bubbles.

The result? A perfect storm of slowing growth, rising prices, and job losses—better known as stagflation. Unlike a regular recession or inflation cycle, stagflation is hard to fix: trying to solve one problem often makes the other worse.

In theory, lower rates help the U.S. government refinance debt more cheaply. But if tariffs cause global retaliation and trade reroutes away from the U.S., revenues fall, supply chains suffer, and tax income shrinks, undermining the very reason for crashing markets and cutting rates in the first place: to ease pressure from rising bond interest payments.

So if this is Trump’s playbook, the cost of executing it could far outweigh the benefits.

Ishan