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Donald Trump’s trade war risks sparking capital flight from the US as the president’s unpredictable tariff policies cause “enormous” damage, hedge fund Elliott Management has warned.
The activist firm, founded and co-led by Republican megadonor Paul Singer, said in a letter to investors seen by the Financial Times that the Trump administration’s economic programme could tarnish the appeal of the dollar and of doing business in the US.
That would risk “capital flight” and a “significant” fall in value of the currency and US assets, Elliott said in a section of the late April letter titled “Bonfire of the American era?”
Elliott declined to comment.
The warning comes after Trump’s tariff blitz triggered weeks of turmoil in financial markets, and marks the latest criticism of the White House from the $73bn-in-assets hedge fund, which earlier this year said the president’s embrace of cryptocurrencies was fuelling a speculative mania.
The tariffs contemplated by the administration were “likely more stringent than the ones that exacerbated the Great Depression in the 1930s”, Elliott wrote in the letter, which was sent to investors after Trump announced a 90-day pause to his sweeping “reciprocal” tariffs on US trading partners last month, but before this week’s US-China trade deal fuelled a further recovery in markets.
“Such tariffs will generate a lengthy, complicated process of negotiation, retaliation and uncertainty for businesses around the globe” that could cause “enormous” damage, the firm added.
Singer has been a major donor to Republicans in recent years, donating $56mn to the party’s candidates in the last election cycle, according to website OpenSecrets.
A small group of top Wall Street figures have spoken out against Trump’s economic policies. Citadel founder Ken Griffin, another major Republican donor, said last year that the president’s tariff plans would put the US “on a slippery slope to crony capitalism”. Bill Ackman, a supporter of Trump in the 2024 presidential campaign, has described the tariffs as “a major policy error”, while billionaire investor Stanley Druckenmiller has said he does not support tariffs exceeding 10 per cent.
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Elliott also said in the letter that the sell-off that followed Trump’s “liberation day” tariff announcements caused “capital destruction on a large scale”.
The S&P 500 index was down by as much as 15 per cent in 2025 in early April, but has since recovered all of those losses as trade tensions receded.
Nevertheless, Elliott said the episode highlighted the “brittleness” of a “massively overvalued stock market”.
The hedge fund was up about 2.5 per cent in the first quarter of the year, according to figures in the letter. The turmoil sparked by tariffs was likely to create greater opportunities for activist investing, as market stress “exposes weakness at companies in need of course correction”, the firm added.
