The Trump crash

A Republican recession looms

No, not another airplane crash. On Monday, Donald Trump’s on-again/off-again tariff policy hit Wall Street (again). The Dow fell more than 1,000 points before finally settling 890 points in the red. The S&P 500 fell four percent, its largest loss since September 2022.

The Trump bump is long gone with both the Dow and the S&P having lost not only all gains since Trump was inaugurated but all gains since Election Day. The markets may rally somewhat on Tuesday, but investors are bearish and few are expecting a serious rebound.

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The financial carnage was attributable to one man. Well, one man and the 77,302,580 voters who put him in office. Monday’s crash and much of the bad financial news is purely due to Donald Trump’s deeply flawed economic policies.

Trump was elected to lower consumer prices (I was promised $1 gas by Trump supporters). What we are getting instead is a completely unnecessary trade war, equally unnecessary antagonism of our allies, a sellout of Ukraine, and cuts to the federal government that are so quick and haphazard that even Republicans in Congress are concerned.

The proximate cause of Monday’s turmoil was Trump’s admission that his policies may be driving the US into a recession. When asked if he expected a recession over the weekend by Fox News host, Maria Bartiromo, Trump hemmed and hawed, saying, “I hate to predict things like that.”

“There is a period of transition, because what we’re doing is very big,” he added. “We’re bringing wealth back to America. That’s a big thing. And there are always periods of — it takes a little time. It takes a little time. But I think it should be great for us. I mean, I think it should be great.”

The stock market could understand and support a coherent plan that involved some short-term pain for long-term gain. There is no coherent plan. Trump announces tariffs on one day, pauses them the next, and repeats the cycle.

If there is any coherent plan, I suspect that it is known only to Trump and his cronies. I would not be surprised if some MAGA insiders were gaming the large swings in the market for their own fun and profit.

That’s speculation, but what we do know is that none of this is good for the economy. Even in the long term. It’s a case of short-term pain for more long-term pain.

As we’ve explained in these pages before, tariffs are not good for the economy. Tariffs are taxes. Taxes increase costs. The entire point of tariffs is to make foreign goods more expensive so that domestic producers can charge more. Things are about to get even more expensive for consumers.

Trump has forgotten that he wasn’t sent to Washington unleash DOGE or enact protectionist policies.

Trump was elected for a few reasons, but chief among these were inflated consumer prices and a sense that Biden and Harris were untrustworthy and undependable.

In exchange, we are now getting policies purposely designed to increase prices from an erratic president who calls a trade treaty that he signed himself a bad deal. The unvarnished truth is that Trump cannot be trusted even with a signed agreement, much less a verbal understanding like the one he had with Ukrainian President Zelensky, which Trump is already reneging on, or campaign promises.

Tariffs are bad, but the ongoing uncertainty is even worse. Companies can develop strategies to mitigate the impact of tariffs, but there is no such strategy to mitigate Trump’s indecisiveness and waffling.

Many of Trump-47’s policies mirror his policies as 45. They were bad ideas then as well, but their effects were masked by the pandemic recession. As I’ve pointed out in the past, US manufacturing and agriculture were both deeply hurt by the original Trump tariffs.

A recession was looming in 2019, but Trump escaped blame for the downturn when COVID emerged as a scapegoat. Now, in a case those not understanding history being doomed to repeat it, Trump tariffs are pushing the US toward a second recession.

We are only 50 days into the second Trump Administration (1,410 days until he leaves office if you’re counting) and it is already foundering. Trump shows no signs of reversing course, but unless he does there will be widespread economic devastation.

Republicans are cruising toward a disastrous midterm election. Some of them realize this despite the Charlie Sheen-esque claims of “Winning!”

In less than half a hundred days, Trump and MAGA have forgotten the most basic political maxim: “It’s the economy, stupid.” That’s an especially important thing to remember when you campaigned on fixing the economy.

Other forgotten key points are like unto the first: Voters don’t like chaos or incompetence, and they don’t like it when government actions impact their lives negatively. Trump-47 and MAGA will be checking all of these boxes in spades.

If you voted Trump thinking that it would mean a return to prosperity and low inflation, you’ve been had. That’s about to be apparent and this time, there won’t be any pandemic to take the blame.

Now if only the Democrats can pull themselves together. All they have to do is be sane, but can they do it?

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