Did Trump's 2025 Presidency Impact the Stock Market Crash? Looking at the Data from 2026

When a new president takes office, investors immediately begin speculating about what it means for their portfolios. Donald Trump returned to the White House in January 2025, and many people have since asked whether his policies directly triggered any stock market volatility that year. The reality, based on historical data and market mechanics, tells a more nuanced story than simple blame-shifting would suggest.

Many investors instinctively link presidential performance to stock market performance. When the market climbs, supporters credit the sitting president. When it declines, critics point fingers at the administration. However, this framing is fundamentally flawed. The stock market operates on complex forces far beyond presidential control — from interest rate policy set by the Federal Reserve to global economic conditions to company earnings growth.

Trump’s First Administration Delivered Mixed Results — But Not as Simple as the Headline Suggests

To understand what happened in Trump’s second term, it helps to examine his first administration’s track record. The S&P 500 achieved an 83% cumulative return from 2017 through 2020, despite two significant pullbacks: roughly 15% in late 2018 and a dramatic 35% decline in early 2020.

But were these declines actually caused by the president’s policies? In 2018, the Federal Reserve was hiking interest rates aggressively, and stocks were trading at elevated price-to-earnings ratios — well above historical averages. These factors, not presidential action, drove the correction. The 2020 crash stemmed from COVID-19, a crisis entirely outside any administration’s influence. If anything, Congress and the Federal Reserve’s stimulus measures — not Trump specifically — helped spark the rapid recovery later that year.

The Historical Stock Market Crash Pattern Reveals What to Actually Expect

Over the past century, the stock market has experienced roughly 10 major crashes where the S&P 500 fell 20% or more. That translates to approximately one significant crash every 10 years, though not with perfect timing. This randomness is built into free markets.

From a purely probabilistic standpoint, there’s roughly a 10% annual chance of a 20%+ crash in any given year. This baseline risk exists regardless of who sits in the Oval Office. The president is one of thousands of variables affecting markets — and usually a minor one.

2025’s Valuations Made a Market Crash More Likely Than Normal

When Trump took office in 2025, the S&P 500 was trading at an average price-to-earnings ratio of 30 — near an all-time high. This elevated valuation had real implications. If multiples had normalized to their long-term average of around 20, that alone would have constituted a 20%+ correction, regardless of presidential policy.

We saw this dynamic play out throughout 2025. Nvidia, once the world’s largest company, experienced sharp sell-offs driven by disruption concerns in the AI sector. Market corrections materialized not from Trump administration policies, but from the basic mechanics of valuations reverting to more sustainable levels.

What 2025 Actually Taught Us About Presidential Influence on Markets

Now that we’re in 2026 and can look back on 2025 with hindsight, one crucial lesson emerges: Trump’s presidency had minimal direct impact on stock market movements. When markets fell, it wasn’t because of new policies — it was because valuations needed adjustment. When they rose, it reflected earnings growth and investor sentiment, not executive orders.

Presidents from both parties tend to claim credit for market gains and shift blame for declines. Don’t fall for it. The starting valuations a president inherits, global economic cycles, Fed policy, and individual company performance matter far more. Trump is no exception to this rule.

If you watched the stock market crash, soar, or flatline through 2025, remember: the president pulled fewer strings than headlines suggested. Investors who understand this reality make better decisions than those who don’t.