Trump Could Be Exploiting Tariffs To Manipulate The Stock Market

Trump has enormous power over the stock market. His recent behavior suggests he is manipulating it for profit.

by Bob Cesca

WASHINGTON, DC – At some point, we’ve all wondered why Donald Trump would so recklessly endanger the economy and, with it, the personal finances of American voters due to his unnatural obsession with tariffs: federal taxes on imported goods paid by American corporations and passed along to consumers like you and me.

But if we step back and look at the big picture, the kleptocracy snaps into focus.

You might’ve noticed that after Donald’s tariffs against Canada, Mexico, and China went into effect this week, markets experienced steep declines totaling more than 1,400 points off the Dow over a couple days. Then, after he said he’d delay his auto manufacturing tariffs, the markets rebounded. This kind of whiplash movement based almost exclusively on his herky-jerky tariffs reminded me that he could be doing this in order to deliberately move the markets. In other words, his tariff obsession could have zero to do with trade or the economy and everything to do with Donald exploiting his power to enrich both himself and his allies.

Back in early 2018, during his first term, I noticed something hinky about the confluence of Donald’s blurts about his tariff-based trade war with the movement of the stock market. Trump or people close to Donald might’ve been profiting off the volatility of the markets whenever his tariff announcements moved the markets.

Coincidentally – or maybe not quite that – the president issued his first tariffs on Jan. 22, 2018, and the first gigantic market decline of his presidency happened two weeks later on Feb. 5: a 1,175 point drop. However, there were smaller declines that began the day after the first tariff announcement. Many of the biggest gains and declines occurred within days, sometimes within hours, of Donald’s various statements.

When I scanned the financial sites back then, traders and analysts alike were clear about why the markets freaked out on each occasion, and the freak-outs almost always coincided with another tariff threat. Just like what’s happening now.

Vanity Fair’s William Cohan published a mind-blowing item in October 2019 that closely examined several “chaos trades” and the linkage between Donald’s tariffs and the movement of the S&P 500. Sure enough, someone – or a connected group of someones – has been making colossal trades just prior to Donald’s announcements about the trade war. When I say “colossal,” I’m vastly understating the magnitude of the windfalls these trades have produced.

Cohan wrote about one trade in which someone bought 82,000 “e-mini” contracts on the Chicago Mercantile Exchange (CME) just before the markets closed on Sept. 10. The following day, Donald announced a delay in implementing new tariffs on China, which was received as good news, thus launching the S&P skyward by 47 points to close at 3,016. The trader who ordered the 82,000 e-mini contracts, at $50 per contract multiplied by the 47-point gain, made a profit of around $190 million in one suspiciously miraculous day. If the investor’s last name isn't Kreskin, there’s no way of knowing that Donald would suddenly emerge with that announcement about China, unless the president or someone acquainted with his thinking alerted the investor. If that happened, Donald and the investor could be in a lot of trouble.

A $190 million profit earned on the kneejerk whim of a Donald blurt is pocket lint compared with another suspicious trade that came down on June 28 that year when another mysterious someone bought a whopping 420,000 e-minis. At the G20 summit the very next day, following a meeting with Chinese President Xi Jinping, Donald told reporters that everything with China was hunky-dory, trade and tariff wise. The next week, the S&P jumped 84 points, earning the mystery investor a nosebleed-inducing profit of $1.8 billion – that’s billion with a “b.”

Then, on Aug. 23, according to Cohan, an unknown investor picked up 386,000 e-minis. On Aug. 26, during the G7 summit, we learned from the president that Chinese trade officials had called and told him they were ready to return to the negotiation table. On that news, the S&P jumped 80 points and the investor raked in a profit of $1.5 billion. It turned out, however, that Donald lied about the phone call. China’s negotiators hadn't called him at all. In other words, someone earned a sum of around half of Donald’s entire net worth based solely on a lie.

One CME veteran told Cohan, “There is definite hanky-panky going on, to the world’s financial markets’ detriment. This is abysmal.”

The Vanity Fair piece also described a short sale on the S&P that was, yet again, strangely linked to market movement triggered by the president. Briefly put, taking out a short position on a stock is a bet against the success of a stock. Turning a profit on a short sale requires the stock to drop in value. Some shorts end up driving a stock down even more than it would have fallen naturally. It’s a crappy but common investment strategy that frankly ought to be illegal.

Words like “illegal,” “hanky-panky” and “abysmal” barely begin to describe the possibility that Donald might also be shorting the markets based on his tariff pronouncements. It doesn’t take a Wall Street genius to know that if there’s bad news for the markets, short positions can be quite lucrative.

So, as we’ve seen this week, when we look at those one-day declines, moving on Donald’s tariff threats, it seems as if short positions, rather than traditional investments such as those immense e-mini orders Cohan described, would be the only investments to make in accordance with bad news from Donald – and the only person who really knows what Donald might say from moment to moment is Donald.

Is the president even capable of knowingly manipulating the stock market? Oh yes. You might recall a massive investigation by the New York Times indicating that Trump engaged in a scheme with his dad, Fred Trump, known as “greenmailing”:

During the 1980s, Donald Trump became notorious for leaking word that he was taking positions in stocks, hinting of a possible takeover, and then either selling on the run-up or trying to extract lucrative concessions from the target company to make him go away. It was a form of stock manipulation with an unsavory label: “greenmailing.” The Times unearthed evidence that Mr. Trump enlisted his father as his greenmailing wingman.

There’s no denying that he’s pre-wired for this scam. Additionally, knowing his history with Wall Street combined with the obvious impact of his inexplicable obsession with tariffs, he’d have to be in a coma not to notice the power he possesses over the markets. It also goes without saying he’s not personally making these trades. He could merely be tipping off a trusted ally who might be several hops removed from the actual broker of the trades.

Or there’s always the possibility that this is a wild coincidence, and that the one honorable thing Donald’s ever done in his life is to ignore his ability to move the markets by threatening tariffs. I’m being sarcastic, of course.

His second term is kleptocratic for sure, with wealthy sycophants allegedly paying him $5 million for secret meetings at Mar-a-lago. He dropped a Securities and Exchange Commission probe into a Chinese crypto bro who invested $75 million in Donald’s $TRUMP meme coin. During his first term, he dragged his entire motorcade to his resorts in Bedminster or Sterling or Mar-a-lago on an almost weekly basis. He hosted 500 Saudis at Trump International. He sent Air Force transports to the financially struggling airfield closest to his Turnberry golf resort in Scotland and ordered the airmen to stay overnight at the resort. Does he really seem like a man who’s loath to profit off his presidency?

Bear in mind, too, that Donald once referred to the emoluments clause of the U.S. Constitution as the “phony emoluments clause” during remarks in the cabinet room. Make no mistake: He knows it exists, he just has zero respect for its existence.

To be clear: I don’t have any direct evidence showing a premeditated linkage between his tariffs and any profiteering off the volatility the tariffs create. But watch the markets yourself. Notice what happens whenever a new tariff is imposed – or retracted. He controls all of that movement. And no one really believes he possesses either the ethics or the restraint to not exploit that power.

If we’re lucky enough to win back Congress next year, perhaps someone should look into it.

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