When Donald Trump backed off most of his tariff regime earlier this week, there was a brief moment of…well, I won’t call it hope—that’s too strong a word in these troubling times. Respite, maybe? A sense we could take a breather when it came to impending economic meltdown, even as the administration’s assault on United States democracy and constitutional rights continued apace? Alas, after markets rallied Wednesday following his tariff turnabout, chaos reigned once again Thursday as Trump escalated his trade war with China, clarifying that Chinese goods exported to the US would now face a minimum tariff rate of 145%.
In response, first, Beijing announced retaliatory tariffs—125% on all American goods—designed to inflict significant pain on consumers. Then, the dollar dropped, and so did US stocks. The volatility continued as markets opened Friday, with what analysts called a “confidence crisis” in the US: “The global safe-haven status is in question,” Priya Misra, a portfolio manager at J.P. Morgan Asset Management, told the New York Times this week.”
To put that in Trumpese: People have “been getting a little yippy.”
That was the president’s stated reason Wednesday for suddenly calling off many of his so-called “Liberation Day” tariffs—at least for 90 days. And, after the markets swung back in response to his apparent de-escalation, he took a victory lap: “It was the biggest day in history, the markets,” he said Thursday, touting the stock rebound from the plunge he personally caused. “So we’re very, very happy with the way the country is running.” But you could say that people are still yippy, as it were: His unpredictability—the sense that he could impose or pull back on these policies at any time, as he’s already done at several points not even three months into his presidency—has weakened America’s reliability.
“This is the worst self-inflicted wound that I have ever seen an administration impose on a well-functioning economy,” former Fed chair and Treasury Secretary Janet Yellen said on CNN Thursday.
Are Trump’s actions the result of a misguided belief he can bend markets to his will the way he has with the US political system? Or is this intentional market manipulation in service of grift, as it appeared to be when he told Truth Social followers it was a “great time to buy” Wednesday morning—just before he sent markets soaring with his trade war reversal? Whether it’s one or the other or some combination of both—I would suspect it is most likely the latter—the chaos reinforces the need for real checks and balances on this administration. Even a handful of Republicans, normally so deferential to (and afraid of) this president, have signed onto a bill that would reassert congressional oversight of the chief executive’s tariff powers. “For too long, Congress has delegated its clear authority to regulate interstate and foreign commerce to the executive branch,” Republican Chuck Grassley, a cosponsor of the legislation, said in a statement, calling for lawmakers to “have a voice in trade policy.”
But it’s not easy to claw back power once you give it up: Trump has said he’d veto the bill. “Reckless improvisation is not a strategy,” as former Treasury Secretary Larry Summers put it this week, after Trump reversed course. “We are far from being out of the woods.”
