Investments in stocks expected to benefit from U.S. President Donald Trump's policies — the so-called "Trump trade" — are rapidly losing steam. Tariff- and immigration-linked stocks are tumbling in unison, while the U.S. Treasury market is flashing even more dramatic signs of an exodus.
'Buy Trump, Sell Biden' Basket Returns to Pre-Election Levels
The "buy Trump, sell Biden" basket has fallen 20% from its mid-2024 peak, retreating to levels last seen around the November 2024 presidential election, the Economist reported on Monday. Key turning points include a Supreme Court ruling that tariff policies were unconstitutional, clashes with the Federal Reserve, and airstrikes on Iran.
Manufacturers and private prison operators — sectors expected to benefit from tariff and immigration policies — have been hit especially hard. The Supreme Court blocked tariff measures amid mounting public anger over rising prices, while immigration policy has faced massive public backlash over aggressive raids by Immigration and Customs Enforcement (ICE) agents and the shooting of civilians, clouding the policy outlook.
"Trump's all-purpose economic and diplomatic tool, tariffs, failed to benefit domestic manufacturers even before the Supreme Court ruling," the Economist noted. "The inconsistency of tariff imposition across countries also played a part."
The immigration sector tells a similar story. Although the Trump administration has poured massive funding into enforcement, most of the money has flowed directly to government agencies such as ICE, leaving private-sector gains far below market expectations.
Rumble and Trump Media & Technology Group (hereafter Trump Media) stand out among the worst performers. Rumble, a right-wing social media platform, saw its market capitalization more than double immediately after the election but has since retreated to pre-election levels. Trump Media has plunged 80% from its peak.
Defense and Energy Hold Up… Treasury Market Delivers the 'Real Warning'
By contrast, defense, energy, and mortgage stocks — sectors with relatively clear policy tailwinds — have outperformed even in the downturn.
Trump's territorial claims over Greenland and pressure on NATO allies over free-riding have fueled gains in defense stocks. U.S. oil companies have also seen profits surge, buoyed by pro-fossil-fuel policies and a spike in global crude prices driven by the fallout from the Iran war.
Fannie Mae and Freddie Mac, which provide liquidity to the U.S. mortgage market, saw their shares soar on rumors that Trump was interested in privatizing the two entities. Although prices have pulled back from their highs, they remain above levels seen at the time of the November 2024 election.
Yet the most resounding "goodbye Trump trade" signal has emerged not from the stock market but from the U.S. Treasury market, the Economist emphasized.
"The yield on the 30-year U.S. Treasury bond has risen 0.4 percentage points compared to November 2024," the outlet wrote. "Trump is unpredictable, but his ability to drive down Treasury prices appears to be an exceptional talent."