Cathie Wood has described Donald Trump’s sweeping new tariff regime as “shock therapy” that could, paradoxically, clear the path to freer global trade.
The founder and chief executive of ARK Invest, a high-profile US investment firm known for backing high-growth tech companies, argued that what looked like the “largest and most regressive tax increase in US history” may end up being a prelude to “serious negotiations” that reduce both tariffs and non-tariff barriers.
Wood’s comments follow a chaotic week for global markets triggered by Trump’s plan to hike tariffs on all Chinese imports and impose sweeping levies on countries with significant trade surpluses with the US.
That policy, announced on Monday and partially walked back over the weekend, sent equity and bond markets into turmoil before a late-week rebound.
Now, with Treasury Secretary Scott Bessent taking over from hardliner Peter Navarro in trade talks, Wood said the administration’s approach may not be as scattergun as feared.
“What once seemed like a chaotic situation based on incomprehensible ‘reciprocity’ calculations could have been a setup - premeditated or otherwise - for serious negotiations,” she said.
She pointed to Elon Musk as a still-influential figure within the Trump camp, calling him “a strong advocate for this solution to the tariff and non-tariff trade barriers that have evolved over the last 50 years”.
While many investors have been preparing for economic slowdown, Wood said the disruption might give the White House and Federal Reserve cover to act.
“Now that much of the economy has seized up in response to the fear of tariffs, the drop in activity is likely to be more severe than otherwise would have been the case, a clarion call for tax cuts, deregulation, and lower interest rates,” she said.
She added that Trump’s recent remarks about strong economic growth and stock market gains reflect a desire to stimulate activity heading into the second half of the year.