9 more thoughts on tariffs
It's a "self-induced, economic nuclear winter."
Here at Between the Motion, I promise even-keeled takes. I’ll try to stick to that here, even as we head into a siren-emoji kind of day.
We’re entering market crash territory with no apparent off ramp. I posted my analysis of President Trump’s tariffs Saturday. Here are nine more thoughts as we begin the week.
One thing I glossed over in my previous post was the question of whether Trump campaigned on the policies now wrecking the economy. He did. Kamala Harris clearly articulated the likely consequences. No one should be surprised by any of this.
The thing is, when voters listened to Trump talk about tariffs, they heard “economy of 2017-2019.” Trump’s first-term tariffs were a drop in the bucket compared to what he’s doing now — baseline 10% tariffs on 180-plus countries, with much higher taxes on imports from major trading partners. Even though Trump promised to do what he’s doing now, business elites supported him anyway because they didn’t believe he’d actually do it.
Buyer’s remorse is taking hold. Billionaire investor Bill Ackman, who endorsed Trump and has been a vocal supporter, posted last night that we are “heading for a self-induced, economic nuclear winter, and we should start hunkering down.”
Folks like Ackman supported a generic, theoretical idea of a Trump presidency based on how things turned out in the first term — tax cuts, craziness held in check, etc. etc.
Now, they’re losing a lot of money. “Business is a confidence game and confidence depends on trust,” Ackman wrote. Trump’s support from Wall Street and business leaders is faltering. The new tech right could be next to show jitters.
A key defense of Trump’s tariffs from the MAGA side is that we’re only seeing the first move from Trump, the master negotiator. He’s going to bring countries to the table and get a better deal for America.
Trump explicitly rejected that defense Sunday while talking to reporters. “I spoke to a lot of leaders, European, Asian, from all over the world,” Trump said, per AP. “They’re dying to make a deal. And I said, we’re not going to have deficits with your country.” No deal. No trade deficits. Instead: “Sometimes you have to take medicine to fix something,” Trump said.
Even if Trump changes his mind, he has lost credibility as a good-faith negotiator. Remember the on-again-off-again tariffs on Canada and Mexico? Foreign leaders can’t trust him. Markets can’t trust him. What does a reversal even mean at this point? There is no such thing as a done deal with Trump.
We’re only two months into Trump’s term. Markets are tanking. Recession odds are rising. Confidence is evaporating. It’s going to be a long four years.