In the past week, the stock market has shown notable volatility following President Donald Trump’s announcement on April 2 regarding a 10% baseline tariff on all imported goods, alongside additional taxes impacting 60 nations. By April 9, he opted to suspend most of these tariffs for three months, while still maintaining the 10% baseline and increasing the import tax on Chinese goods.
Initially, the stock market reacted favorably to Trump’s “90-day pause” announcement, with the S&P 500 climbing over 9% on Wednesday afternoon. However, Thursday saw a stark decline, with the Dow plummeting by 1,900 points and the S&P 500 falling by 5%, highlighting the market’s ongoing instability.
Just hours before the announcement to pause the tariffs, as the stock market continued to grapple with rising trade tensions, Trump took to his social media platform, Truth Social, to reach out to potential investors. He posted, “THIS IS A GREAT TIME TO BUY!!!,” signing with his initials “DJT,” which also correspond to the stock ticker for Trump Media and Technology Group Corp. His signature was particularly striking, as he does not often include his initials. In the wake of the tariff reversal announcement, Trump Media and Technology Group’s stock surged nearly 22%, with an additional 5% increase in early pre-market trading on Thursday.
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“BE COOL! Everything is going to work out well. The USA will be bigger and better than ever before!” Trump assured his followers in another post just hours before announcing the tariff pause.
Lawmakers Raise Concerns About Potential “Insider Trading”
Senator Adam Schiff, a Democrat from California, has called for an investigation into Trump’s “great time to buy” post, suggesting it could indicate insider trading or manipulation of the stock market.
“Family meme coins and everything else shouldn’t exempt anyone from scrutiny regarding insider trading or self-enrichment. I hope to learn more soon,” Schiff told TIME, referencing earlier criticisms Trump faced over the launch of his Trump meme coins earlier this year.
The U.S. Securities and Exchange Commission (SEC) defines market manipulation as actions that artificially affect the supply or demand for a security, which may include spreading false information or manipulating prices to create an illusion of demand.
In contrast, insider trading refers to buying or selling a security based on material, nonpublic information, in violation of a fiduciary duty or trust relationship. A common scenario arises when someone with insider knowledge tips off close family or friends so they can trade stocks for profit.
Schiff and other Democrats argue that the timing of Trump’s social media post raises significant legal and ethical issues. They are pressing Trump to clarify who was aware of his tariff pause decision before it was made public and whether any of those individuals leaked the information. When asked about the timing of his decision, Trump stated in the Oval Office that he had been pondering it “for a period of time,” adding, “I wouldn’t say just this morning. I’ve been considering it for the last few days… It probably came together early this morning.”
On Thursday, Schiff and Senator Ruben Gallego, a Democrat from Arizona, sent a letter to Trump’s Chief of Staff Susie Wiles and Jamieson Greer, the Acting Director of the U.S. Office of Government Ethics, expressing concerns and requesting a review of any communications between the White House, executive branch agency employees, and external parties, including financial institutions, that may have involved non-public information. While Schiff can initiate an investigation, he lacks the subpoena power available to a Congressional committee.
Representative Alexandria Ocasio-Cortez, a Democrat from New York, also expressed her concerns, urging all Congress members to disclose any stock trades made within the past 24 hours. “I’ve been hearing some interesting chatter on the floor,” she remarked on X Wednesday night. “The disclosure deadline is May 15th. We’re about to learn a few things. It’s time to ban insider trading in Congress.”
In Schiff’s inquiry letter, he specifically mentions Elon Musk, who has played a significant role in the Trump Administration through the Department of Government Efficiency (DOGE).
“Tesla’s stock rose by 18% immediately following the President’s announcement to pause most tariffs, which Mr. Musk had publicly opposed,” Schiff noted.
Meanwhile, House Minority Leader Hakeem Jeffries, a Democrat from New York, announced on Thursday that House Democrats will pursue investigations into potential stock manipulation.
Read More: Trump Aims to Frame His Tariff Pause as a Victory. It’s Not
Expert Insights on the “Insider Trading” Allegations Against Trump
Karen Woody, a law professor at Washington and Lee School of Law, asserts that an investigation into whether Trump or his associates engaged in insider trading or other illicit financial activities is justified.
“This isn’t a witch hunt; the allegations aren’t unfounded. This is a clear case where there could be real market manipulation by someone with the ability to influence the markets,” Woody explains.
Typically, Woody adds, the SEC would be the next entity to investigate these claims as it serves as the market’s watchdog.
However, Adam Pritchard, a law professor at the University of Michigan, contends that Trump’s post on Truth Social does not constitute insider trading unless there is proof that Trump was involved in trading or had access to more detailed insider information.
“If he [the President] shares information with Donald [Trump] Jr., and then Donald Jr. trades based on that knowledge, we have a problem. But if Trump makes statements at a press conference or on social media, it does not qualify as insider trading,” he elaborates.
Detecting violations of insider trading laws can be intricate, as highlighted by Kevin Douglas, an assistant law professor at Michigan State University, who points out the absence of federal statutes explicitly prohibiting insider trading. The current case law does not provide clear guidance on the issue.
The Stock Act, which prohibits the President and federal employees from trading based on non-public information, defines non-public information in a way that creates ambiguity, Douglas explains in a statement to TIME, emphasizing how this vagueness complicates legal interpretations.
Woody adds that the circumstances surrounding Trump’s tariff pause are particularly complex, as the same key players are involved on multiple fronts.
“In this situation, you have the creators of the crisis and those who can either worsen the situation or attempt to resolve it, all being the same individuals,” Woody remarks. “These [Trump’s] tariff policies are what triggered the market downturn. Then, with just a social media post, that can be reversed. Naturally, those aware of this information can leverage it to their benefit.”
