Was Trump's Tariff Pause Part of a Massive Insider Trading Scam?

Would he have resisted the temptation to make money for his family?

As ever, writing about the actions of President Trump does not easily lead to thoughtful analysis. In the past few days, I have read lots of well considered pieces about the “overthrow of close to a century’s trade policy” and “the most profound, harmful and unnecessary economic error in the modern era”. I agreed with those that thought it pointless to try to divine some underlying intellectual coherence to Trump’s actions - beyond the fact that he has been obsessed with tariffs for decades - and now has a chance to surround himself with people who agree with him, or at least who won’t hold him back. (This is in contrast to his first term where his economic advisers worked to keep his economic approach conventional.)

Trump’s decision to pause all but the biggest tariffs on China adds weight to this view. He might himself have believed his plan was brilliant (“I know what the hell I’m doing”, he said on Tuesday and the previous day he had claimed “Virtually every country wants to negotiate”) but he hates bad publicity. Collapsing share prices and a sell-off in US bonds may have changed Trump’s mind: rising bond yields would make business borrowing more expensive and Trump has spent most of his life managing huge debts to various banks. So he found it easy to turn 180 degrees and announce a 90-day pause, sending the stock market soaring. For someone who believes in tariffs he didn’t find it very difficult to stop believing in them when it was making him look silly.

Is it a scam?

Earlier in the day, Trump had tried to reassure investors with social media posts. Was the second of these “THIS IS A GREAT TIME TO BUY” a signal that he was about to change course? Various US Democrat politicians have alleged that an insider trading scam was unfolding, including Senators Adam Schiff and Chris Murphy. But the evidence is not limited to the coincidence of Trump’s post and the announcement of tariff pause a few hours later. The X.com account “unusual_whales” has over 2 million followers and specialises in market data information (it is linked to a financial data website). It identified “509 calls” - effectively a trader betting on the stock market price rising very rapidly. In this specific case the trader is betting on the value of a fund that tracks the SPY - S&P 500 share index - and estimating its price would rise above $509, with the call expiring in one day (which suggests a very specific range of knowledge, not someone expecting the market to rise over time). According to this analysis, reflected elsewhere online, call options valued in millions were also placed on the NASDAQ index (QQQ) which also surged on the tariff pause. As the X.com poster noted, both the SPY and QQQ trades were “probably the best option trades you will see in your lifetime on the indices.”

https://x.com/unusual_whales/status/1910074740619805096

I would not claim any specialist knowledge as an investor. But would it be surprising if Trump used the opportunity to make some “free money” for himself or perhaps for some of his friends? Particularly those friends that have been hit by the market collapses of recent days.

This will be an interesting story to follow in the coming weeks.