The ‘Trump Set’ for Stocks Fades as Iran War Escalates

Wall Street’s long-held belief that President Donald Trump would intervene to stabilize markets during a crisis is being questioned as the conflict with Iran intensifies. Strategists warn that the dynamics of this war are different from previous instances where Trump appeared to act as a backstop for investors, a phenomenon known as the “Trump put” or, more colorfully, the “Taco trade” – Trump Always Chickens Out.

A Different Kind of Crisis

The current situation, stemming from the U.S.-Israeli attack on Iran, presents unique challenges. Unlike previous instances such as trade disputes with China, discussions of invading Greenland, or criticisms of the Federal Reserve, the Iran war carries a momentum of its own, making it harder for the White House to control the fallout. Bob Elliott, chief investment officer at Unlimited, explained, “It goes back to the classic phrase about war, which is it has a momentum of its own once it starts.” Bloomberg

Economic Concerns Mount

The conflict is already destabilizing the Middle East and threatens to trigger a new wave of inflation in the U.S. Due to rising oil prices. The lack of a clear complete in sight raises the prospect of a prolonged conflict with unforeseen consequences. This differs significantly from past situations where Trump’s actions were more predictable. Yahoo Finance

Trump’s Recent Threats

Adding to the uncertainty, President Trump issued a direct threat to Iran on March 21, 2026, warning that the U.S. Would attack Iranian power plants if the Strait of Hormuz was not fully reopened within 48 hours. Iran responded with a warning that it would target U.S. Infrastructure in the Gulf if Trump carried out his threat. CNBC This escalation underscores the unpredictable nature of the conflict and diminishes the likelihood of a quick resolution.

The End of the ‘Taco Trade’?

Previously, traders had reach to expect that Trump would backtrack if financial markets declined too sharply, leading to a “buy-the-dip” mentality. But, the current situation suggests this strategy may no longer be reliable. The potential for prolonged conflict and the broader geopolitical implications make it tough to predict Trump’s next move, and the stakes are considerably higher. The Strait Times

Key Takeaways

• The “Trump put” – the expectation that President Trump would intervene to stabilize markets – is being questioned amid the Iran conflict.
• The Iran war’s momentum and potential for escalation make it different from previous crises.
• Rising oil prices and the threat of prolonged conflict pose significant economic risks.
• Recent threats from President Trump and Iran’s response highlight the unpredictable nature of the situation.