Cathie Wood Warns Trump's Tariffs Are 'Tax Increases' That Hurt Growth — But Says Innovation Will Thrive In The 'Turmoil'

Prominent investor Cathie Wood is sounding the alarm on President Donald Trump‘s tariff policies, warning they could hamper economic growth while simultaneously creating opportunities for innovative companies.

What Happened: “Tariffs are tax increases, and tax increases are bad for economic growth,” said Wood, CEO and CIO of Ark Invest, in recent comments addressing what she called “tariff turmoil.”

Wood, popularly known for leading ARK Innovation ETF (NYSE:ARKK), cited research from economist Arthur Laffer, who argues that trade deficits aren’t inherently problematic since they represent capital surpluses, with foreign dollars flowing back into U.S. investments.

The global market has experienced significant volatility since Trump imposed 145% tariffs on Chinese imports earlier this month, prompting Beijing’s 125% retaliatory tariffs on U.S. goods. The S&P 500, tracked by SPDR S&P 500 (NYSE:SPY), is down 6.54% year-to-date, while the NASDAQ-100, tracked by Invesco QQQ Trust (NASDAQ:QQQ), has fallen 8.40%.

While Treasury Secretary Scott Bessent reportedly called current tariff levels “unsustainable,” China’s Ministry of Commerce denied ongoing bilateral trade negotiations.

Wood believes Trump’s ultimate goal is negotiating all tariffs and trade barriers down. “The only way that really happens is if he does have success in negotiating all tariffs and non-tariff trade barriers down so that the globe has a massive tax cut,” she said.

See Also: Warren Buffett Says Millions Are Trapped Living An ‘American Nightmare’ — But Proposes A Tool ‘Far More Useful’ Than Raising Minimum Wage

Why It Matters: Despite concerns, Wood sees opportunities for innovation-focused companies during economic uncertainty. “Innovation gains traction during turbulent times,” she noted, highlighting automation and artificial intelligence as potential beneficiaries of companies seeking efficiencies amid rising costs.

Wood’s perspective echoes concerns from other business leaders. British billionaire Richard Branson recently criticized Trump’s tariff decisions as causing “a complete meltdown” two weeks ago, calling the unpredictability “awful for everybody around the world.”

The late legendary investor Charlie Munger once warned that a “full-scale tariff war” would be “massively stupid” for both the U.S. and China.

Photo Courtesy: Ani_Raw_Shots on Shutterstock.com

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.