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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.”
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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.
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.
