Ark Invest CEO Cathie Wood has offered a contrarian view on President Donald Trump‘s tariff policies, suggesting they could be the catalyst to end a three-year “rolling recession.”
What Happened: In her recent note, Wood explains that tariffs, which initially appeared as a damaging tax increase, might actually be a strategic “setup” for serious trade negotiations.
She believes Trump’s move to involve Treasury Secretary Scott Bessent signals a shift towards lower tariffs and non-tariff barriers, a scenario she argues wouldn’t have been possible without the initial “shock therapy.”
Wood also underlined Tesla Inc. (NASDAQ:TSLA) CEO Elon Musk‘s support for resolving the long-standing trade barriers. Amid recent market volatility, Wood said that Ark Invest operates under the assumption that the administration aims for robust economic growth and a strong stock market leading up to the 2026 midterm elections.
Even before the tariff controversy, Wood anticipated strong growth in the latter half of 2025, predicting that the “last leg of a three-year rolling recession will result in negative Gross Domestic Product (GDP) growth for the first and second quarters.”
According to Wood, this slowdown will give the administration and the Federal Reserve “more degrees of freedom to stimulate than most investors have been expecting.”
Wood argues that the fear of tariffs exacerbating this slowdown will create a “clarion call” for tax cuts, deregulation, and lower interest rates, ultimately paving the way for economic recovery.
See Also: Jim Cramer Warns Nvidia And Apple Shorts May Let Stocks Rally Before Striking Again: ‘Only Way They Can Get Out Of This Mess’
Why It Matters: The Trump administration’s stance on tariffs has kept the market on edge. The initially announced reciprocal tariffs levied on all the “bad actors” to a following 90-day pause have caused wild swings in the stock market.
While trade tensions with China continue, the Trump administration is now targeting sector-specific tariffs on auto and auto parts, steel and aluminum, electronics, semiconductors, smartphones, and pharmaceutical companies.
As of Monday’s close, all three major indexes remained below their 52-week highs. The Dow Jones Industrial Average traded at 40,524 points, down 10.1% from its 52-week high of 45,073.63. The S&P 500, tracked by SPDR S&P 500 ETF Trust (NYSE:SPY), closed at 5,405.97 points, marking a 12.06% decline from its peak of 6,147.43.
Meanwhile, the Nasdaq 100 tracked by Invesco QQQ Trust ETF (NASDAQ:QQQ) settled at 18,796.02 points, down 15.42% from its record high of 22,222.61, according to data from Benzinga Pro.
On Tuesday, the futures of Dow Jones were 0.19% higher, whereas the S&P 500 index was up 0.25% and the Nasdaq 100 index was higher by 0.37%
Read Next:
- Mark Cuban Examines Trump's Tariff Exemptions Rationale On Electronics: ';That's Billions Of Revenue For The USA'
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
