Fresh debate over presidential authority in the economy

WASHINGTON  President Donald Trump on Wednesday floated two unexpected policy proposals that sent stocks lower and prompted fresh debate over presidential authority in the economy.

In a post on Truth Social, Trump said large institutional investors should be barred from buying single family homes. Hours later, he said his administration would block defense contracts unless companies improve delivery performance to the US military and agree to cap executive pay at 5 million dollars while halting dividends and stock buybacks.

The proposals landed abruptly and cut against traditional Republican economic positions. Similar ideas have previously been championed by progressive Democrats including New York City Mayor Zohran Mamdani and Senators Elizabeth Warren and Bernie Sanders.

Trump, however, has never fit neatly into party orthodoxy. His tariff policies, marked by steep import taxes followed by sudden reversals, have little precedent in modern US history. He has argued the measures are necessary to bring manufacturing back to the United States, even as critics warn they raise prices for consumers and businesses.

Despite that record, Trump ran on a pro business populist platform focused on lowering costs for American households. Until now, his direct intervention in corporate governance has been limited, though he has threatened companies over diversity policies and pursued lawsuits against media organizations.

Wednesday’s announcements marked a sharper turn.

Trump framed his housing proposal as an effort to improve affordability, an issue that has become a political vulnerability as the midterm election year begins. High mortgage rates, elevated prices, and a shortage of homes for sale have fueled widespread frustration and eroded confidence in the housing market.

Warren welcomed the proposal, saying she has long pushed to curb Wall Street’s influence in housing. Analysts, however, cautioned the plan may not address the underlying problem, a lack of supply.

TD Cowen analyst Jaret Seiberg said institutional investors account for a relatively small share of the single family housing market. Restricting their participation could increase risk, push prices higher, and reduce the number of rental properties. Housing related stocks fell Wednesday, and Blackstone, a major institutional investor in housing, dropped more than 5 percent.

Trump’s defense industry proposal followed a similar line of criticism. He accused major contractors of prioritizing shareholder returns and executive pay over timely delivery and maintenance of military equipment.

Through executive action, Trump demanded production improvements while ordering companies to suspend dividends and stock buybacks and limit executive compensation. Defense stocks declined sharply following the announcement.

Corporate leaders have grown accustomed to policy shifts announced suddenly through social media during Trump’s presidency. Still, the breadth and timing of Wednesday’s proposals unsettled investors.

After posting their strongest start to a year since 2003, US stocks fell for the first time in 2026, as markets weighed the possibility of further intervention.

As trading ended, uncertainty lingered across boardrooms and financial markets about what actions might come next.