President Trump issued two highly unconventional policy statements on Wednesday, causing stock market declines and raising serious questions about the limits of presidential power in a free-market economy.
First, Trump posted that large institutional investors should be prohibited from purchasing single-family homes.
Subsequently, he stated that his administration would block defense companies from obtaining contracts until they improve deliveries to the U.S. military, unless these companies set an executive compensation cap at $5 million and halt dividend payments and stock buybacks.
These two proposals sound more like they came from a democratic socialist, such as New York City Councilmember Zohran Mamdani, or progressive senators like Elizabeth Warren or Bernie Sanders. However, the chaotic manner of their announcement is quintessentially Trump.
Of course, Trump is far from a typical Republican president. Ultimately, he is not a typical president at all. Trump's erratic tariff policies are unprecedented in modern history; he imposes high import taxes on American companies to incentivize the reshoring of manufacturing—but then frequently scales back the harshest tariffs when criticized for rising prices.
Yet Trump ran as a pro-business candidate, with a populist economic agenda aimed at lowering the cost of living.
Even considering his tariffs, his intervention in corporate boardrooms has largely been limited. He has crossed the line with policies that meddle in business decisions, such as threatening companies that implement strong diversity, equity, and inclusion (DEI) policies and suing media companies.
Beyond that, much of Trump's business agenda has focused on deregulation, tax cuts, and (mostly) moderate antitrust enforcement—all typical Republican stances. But Trump's Wednesday proposals broke from this pattern.
Trump's decision-making is characterized by its capriciousness.
His housing plan aims to address affordability issues, which represent his biggest political vulnerability as the midterm election year begins.
A severe shortage of homes for sale, combined with high mortgage rates and historically elevated home prices, remains a key factor driving American frustration with the current economy—and a reason many now feel despair about achieving the American Dream.
Trump's proposal to kick institutional investors out of the single-family home market has already gained a notable supporter: Senator Warren. In a statement, she noted that she has for years called for "restricting Wall Street from snatching up American homes."
However, this does not address the core issue in the housing market: a severe supply shortage. TD Cowen analyst Jaret Seiberg believes it could even backfire. He notes that while institutional investment in the housing market is growing, it remains quite limited relative to the overall market. While it might spur some home sales, it could increase risk and drive up prices. It might also reduce the number of homes available for rent.
Real estate stocks fell in response. As one of the largest institutional investors in the U.S. housing market, Blackstone Group's stock plunged 5.6% on Wednesday.
Similarly, on Wednesday, Trump echoed progressive arguments by stating that defense contractors earn massive profits from their biggest client—the U.S. government—and then use that money to directly reward shareholders and executives instead of benefiting Americans.
In an executive action demanding improved products and operations, Trump complained that product deliveries were too slow and that maintenance conditions were poor.
Trump's insistence that defense contractors stop dividends and buybacks and slash executive pay is straight out of Warren's playbook—she has long opposed such financial maneuvers, even before becoming a senator. Defense stocks fell sharply on Wednesday.
CEOs have grown accustomed to waking up to far-reaching presidential directives arbitrarily issued by Trump via social media—that was the reality during the Trump administration.
But Wednesday's surprising and abrupt shift in tone unsettled investors and rattled entire industries. The stock market, which had just recorded its best start to a year since 2003, experienced its first decline of 2026.
The question keeping board members and executives awake tonight may be: What comes next?
Comments