The numbers come first.
Ned Davis Research's Trump Trade Index — a basket of a dozen exchange-traded funds built around White House priorities including homebuilding, defense spending and manufacturing re-shoring — has slumped about 16% since May 2026, according to a report published by the firm this week. That reversal is striking because the same index was clobbering the S&P 500 at the beginning of the year.
The slide follows a strong opening stretch. ETFs including the VanEck Rare Earth and Strategic Metals ETF, the Global X Uranium ETF and the Global X Defense Tech ETF each climbed at least 20% at various points in the first quarter of 2026. They held some of those gains into the second quarter before eventually flipping into the red.
'All this is tied to the Iran war and inflation,' said Pat Tschosik, chief thematic strategist at Ned Davis Research. 'Let's just go three months without some sort of inflation shock, right? Between some sort of tariff, or war, or supply chain disruption, could we just go three months without some sort of supply shock?'
The U.S. conflict with Iran has pushed up energy prices, inflation expectations, interest rates and the value of the U.S. dollar, Ned Davis Research wrote. Matt Gertken, chief geopolitical strategist at BCA Research Inc., identified the mechanism clearly: 'Investors who bet on AI and against traditional cyclical sectors outperformed, while those who saw Trump as a champion of U.S. manufacturing, heavy industry and working-class consumption suffered.'
Fund flows confirm the retreat. The Truth Social God Bless America ETF — ticker YALL, with outsized exposure to energy, industrials and financials — has recorded consistent outflows every month since the war began and has dropped more than 4% this year, while the S&P 500 has climbed about 8%. Trump Media & Technology Group Corp., which YALL does not hold, has repeatedly hit record lows this year and remains down 35% year to date, though it has rallied in July.
Not every Trump-aligned fund is underwater. The Point Bridge America First ETF, trading under the ticker MAGA, dropped less than the broad U.S. stock market during the March onset of the Iran war and has remained higher for the year. 'There's a lot of energy in the MAGA ETF,' said Hal Lambert, founder of Point Bridge Capital, adding that energy exposure has helped the fund more or less match the S&P 500's performance.
Policy unpredictability is compounding the analytical challenge. This week the Trump administration replaced the expired temporary 10% global tariff with targeted actions under Section 338 of the Tariff Act of 1930. Canada — the largest single export market for the U.S. — was hit with 50% tariffs on a range of products including beer, wine, paper and hockey sticks. China and Europe are expected to face additional Section 338 tariffs next. 'There's always something — the Iran war, the tariffs,' said Michael O'Rourke, chief market strategist at JonesTrading Institutional Services. 'It's to the point that investors are just shutting these policies out the best they can, because they really can't handicap them.'
CEO Times read: The Trump Trade was never a monolith — it was a collection of bets on specific policy outcomes, and markets are now pricing the gap between executive ambition and execution. The Iran war introduced an inflation shock that free-enterprise investors had not modeled; higher energy costs and rising rates are a tax on the very manufacturing renaissance the trade was supposed to fund. The lesson is not that the underlying agenda — re-shoring, energy dominance, deregulation — is wrong in principle. It is that geopolitical disruption and tariff volatility impose real costs on capital allocation, and that the market, as always, votes before the policy brief is finished.
