What if Trump caused the stock market to crash?

Trump is therefore president. And his first gesture before the strategic reserve in bitcoin and to think about his personal fortune by launching a meme coin for the entire Trump family. But let's get back to what Trump could quickly announce that would have a greater impact on the market.

Customs duties.

Everyone has focused on customs duties and their impact. Me included. So before coming back to it, I want to talk about something more important than that and which could hurt the markets.

The debt ceiling.

So I'm the first to say that the debt ceiling is not a problem. It's a political game and we agree and postpone the problem until later.

Except that here, the blockage does not come from the Democrats but from the Republicans. We tend to forget it, but Trump does not only have friends in the Republican camp and many will use the debt ceiling to make it known. This could therefore last a little even if there is an agreement.

Yellen said this weekend that the Treasury was preparing for exceptional measures.

This means that the Treasury will pay until this agreement is reached.

The problem is that the Treasury does not have that many reserves. The longer this lasts, the less money the Treasury has.

This money from the Treasury goes into the financial system. This is good in the short term for increased liquidity.

And as we know, abundant liquidity is good for the market.

But the question ultimately is when an agreement on the debt ceiling is reached, and it will be, what will be the state of the US Treasury surplus at that time and what will be its strategy to refill the coffers?

The only way is to withdraw cash. Therefore impacting actions.

So perhaps for once we should not be afraid of the debt ceiling, but precisely once an agreement is reached, of what would happen in terms of market liquidity so that the US Treasury finds reserves.

And what happens next can have an impact too. Let's talk about

Will Trump crash the stock market?

Another point, The increase in customs tariffs is inflationary. But especially bad for the dollar. Trump cannot simultaneously want customs tariffs to boost US competitiveness, maintain a strong reserve currency in trade, and a weak dollar.

This is incompatible and this is why the mandate cannot be all or nothing but necessarily a compromise.

Inflation in the US is falling, the economy is strong. Trump is therefore in the right position to pull hard now but not for very long.

Explanations

More tariffs mean more inflation, a stronger dollar, therefore less liquidity on the market, and therefore a stock market which will ultimately fall. We can already see this on all elements except for the stock market which is falling which is boosted by the new entrants at the start of the year. But it is the tree that hides the forest.

Hence the fact that progressive tariffs will surely be applied to encourage deals.

Trump needs a weaker dollar if he wants a rising stock market, reduced inflation, and increased competitiveness of his giants abroad. This also facilitates the payment of the debts of emerging countries whose debt is based in dollars. And they avoid a monetary crisis if the dollar rises too high again.

Trump may want to devalue the dollar as a solution to the trade deficit, but also to maintain the dollar as a big reserve. That would be the big surprise.

This would increase GDP but also inflation and the stock market. I stick to my idea which is to say that we willingly accept inflation, if it allows us to reduce the debt while maintaining the purchasing power of the consumer, create growth and above all raise the stock market.

Let's not forget that Europe and Canada can hardly defend themselves in the event of customs tariffs from the US, but China can support its currency and hurt the US by countering these tariffs; that's why 1: we need more stimulus in China to come 2. Trump can't hit them too hard.

In reality, the US does not have the energy infrastructure to really push companies to return to produce in the US en masse. At least not over 4 years but much more. China has energy capabilities. It's not green, but it's cheap and competitive energy for industry.

The US trade deficit is also what floods the world with dollars and makes them the reserve currency. So wanting to fight this deficit too much also means reducing the strength of the dollar.

It's not one and the other, but one or the other. Which leads us to think that Trump cannot have everything and will especially use one for deals rather than really getting to the end of things

If inflation rises or growth declines, Trump won't really be able to stick with his tariffs for very long.

This is why he cannot wait and will hit the weak hard, especially first, and gradually for China. And above all why these tariffs will only be there in the short term for deals and cannot be maintained throughout the mandate.

When everyone is excited in the markets thinking how Trump is going to boost everything to heaven, that's when I worry

Graphseo Stock Market Portfolio

An exceptional but very volatile start to the year. I already have the impression of having to tear myself away to keep up the performance. 4 years like that is going to be a long time.

Here – I invite you to see my macro analysis to find out where to invest this year 2025 and the stocks I buy.

and if you are ETF, time toinvest in the best 2025 ETFs far from preconceived ideas.

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Julien