CNN
—
Bad things can happen when presidents seem to lose their grip on reality.
After a day of stock market shocks and global
recriminations, there are reasons to question whether President Donald
Trump fully grasps the consequences of the tariff barrage that he used
to fire up a global trade war.
“I think it’s going very well,” Trump told reporters
Thursday, in the aftermath of his “Liberation Day” announcement the day
before.
“It was an operation like when a patient gets operated on
and it’s a big thing,” Trump said. “We’ve never seen anything like it.
The markets are going to boom. The stock is going to boom. The country
is going to boom.”
As chaos whipped across the planet and American seniors
dreaded looking into depleted market-linked retirement savings accounts,
Vice President JD Vance said, “We’re feeling good.” He told Newsmax:
“Look, I frankly thought in some ways it could be worse in the markets
because this is a big transition.”
Their bravado followed the worst day on Wall Street
in five years, where $2.5 trillion was wiped off the S&P index.
This financial carnage was not caused by some act of God, like a
pandemic, or natural disaster, terrorist attack or foreign crisis. It
was the result of a conscious choice by a president making a gut check
call.
And there are growing signs of confusion about the White
House’s strategy, just weeks after Trump inherited an economy that was
humming when President Joe Biden handed it over and stocks hit record
highs.
Trump suggested Thursday evening that his single-handed
blitz against the global trading system was merely a bargaining
position. “Tariffs give us great power to negotiate,” he told reporters
on Air Force One as he left the growing crisis behind for one of his
Florida resorts to host a tournament for the millionaire players on the
Saudi-backed LIV rebel golf tour.
But earlier, on “The Situation Room” on CNN, Commerce
Secretary Howard Lutnick, vowed: “The president is not going to back
off.” And on Fox News, Trump’s top trade adviser Peter Navarro insisted
“this is not a negotiation.”
The conflicting messages and sense of drift posed
fundamental questions of whether a presidential inner circle that
critics have long said is delusional about the impact of a tariff war
also has the competence to navigate out of the crisis.
Those questions were exacerbated by the sleight of hand that
the president used to deliver tariffs that he said were reciprocal and
matched those that were a dollar-for-dollar match but in fact were not.
The rudimentary formula that was used to arrive at bewildering tariff rates deepened the sense of fury among US trading partners.
“They know nothing,” veteran Wall Street trader Peter Tuchman told CNN’s Erin Burnett.
“The formula they used … it’s like apples, oranges, a couple
of cashews divided by 10 times four.” He added: “None of it makes any
sense and billions and trillions of dollars are being wiped out of the
market on a day-to-day basis.
“It was nothing but blood on the streets.”
Financial experts predicted painful price hikes to consumer
goods and a resurgence of inflation — just five months after Trump won
reelection with a promise to cut the costs of food and housing that
bedeviled the country for years.
The immediate impact of the tariff announcements was driven
home when Stellantis, which produces Chrysler and Dodge vehicles, paused
production at plants in Mexico and Canada. Some 900 US-based workers
were temporarily laid off. They won’t be the last if the president’s
action causes an economic downturn.
The enormous risk Trump is taking with the financial
wellbeing of millions of people in the US and abroad is in tune with an
early second term he’s using to conduct the most extravagant power grabs
that he was talked out of in his first.
Trump is challenging the rule of law with his expansive
claims of executive power, has unleashed Elon Musk to eviscerate the
federal government — including health care programs that have saved
millions of lives. Migrants are being swept up off the streets or even
expelled to a vicious El Salvador jail, often in apparent denial of due
process and in defiance of judges and the rule of law.
The circus that took over the White House between 2017 and 2021 is back in town.
Almost unbelievable revelations about top officials
discussing air attacks on Yemen on a chatroom app were followed by zero
accountability for Defense Secretary Pete Hegseth for posting
operational intelligence. The drama provoked the same anxiety about the
competence of Trump’s national security team in a crisis as are now
surrounding his economic brain trust.
In another stunning development, the White House fired
multiple officials, including three National Security Council staffers
after meeting Laura Loomer. The far-right activist who once branded 9/11
an inside job accused the officials of disloyalty to the president.
Trump is causing havoc on his national security team while
also upending decades of US foreign policy, as he has fractured
confidence among America’s western allies that he’d defend them against
Russia.
A recurring trend of Trump’s political career is that his
most outlandish acts — from his criminal indictments to his most
outrageous uses of presidential power — often unleash a hysterical
reaction from critics.
In the eye of the storms of his own creation, the president
draws political energy from the controversy and wrong foots his
opponents. So, it’s fair to ask whether Thursday’s uproar is an
overreaction. After all this is far from the first stocks sell-off in
history.
Top officials insist that the tariffs are a first step
towards building an economy that protects American workers and rebuilds
manufacturing desecrated by the loss of US factory jobs to low wage
economies in Asia and elsewhere.
“What you’re going to see is factories going to be built
here,” Lutnick told CNN’s Pamela Brown. “Why should US policy basically
suggest that you can find the cheapest labor in the world with the worst
labor conditions in the whole wide world, the worst pollution … no
environmental rules at all, let’s go build there because it’s really
cheap, and we will sell it to the great American economy?”
No one can argue that the toll inflicted on former
industrial heartlands is an unworthy issue for a president. And Trump is
responding directly to the thwarted aspirations of millions of his
voters who don’t care that Wall Street traders took a hammering or that
American allies who they regard as freeloaders are angry.
And since China’s entry into the World Trade Organization
ended up bankrolling its spectacular rise, shouldn’t someone be asking
whether a trade policy that created a superpower enemy should be
adjusted?
Trump’s supporters — in the democratic election that he won
in 2024 — also voted for maximum disruption: He left no doubt that he’d
be unleashed in a second term, even if some of his advisers suggested
during the campaign, as they have this week, that tariffs would just be
used as a negotiating tool rather than a permanent high barrier.
It’s the same with national security. The disapproving
foreign policy elites who condemn Trump officials for lax cellphone use
come from the same intellectual class that brought America the lost wars
in Iraq and Afghanistan. And whether it’s fair or not, many citizens
view the federal government as indifferent to their plight and ripe for
Musk’s chainsaw.
“To anyone on Wall Street this morning, I would say trust in
President Trump,” White House press secretary Karoline Leavitt said on
CNN Thursday, trying, and failing, to calm the coming stock market
mayhem. “This is a president who is doubling down on his proven economic
formula from his first term.”
Wall Street traders may no longer trust Trump, but it will
take more than a stock market slump to shatter the rare bond that the
president enjoys with his base.
Still, if the markets crisis develops into a recession and
if the temporary pain that administration officials say will pave the
way to a new economic golden age turns out to be more permanent, Trump’s
support may face its steepest test. Coming days may establish whether
the president and his supporters are willing to pay a significant
economic or political price for the fruition of campaign trail vows.
And ahead of midterm elections in November 2026, Trump’s
fellow Republicans may soon start to learn whether more moderate and
independent voters who bought into Trump’s vaunted dealmaking and
business mystique and thought he could supercharge the economy will
stick with his party when he’s off the ballot.
“The challenge these tariffs are going to present is that
they are almost certainly going to raise the cost of living for
Americans at least in the short-term,” Republican pollster and
strategist Kristen Soltis Anderson told CNN’s Kasie Hunt.
“What Donald Trump is asking is for everybody to endure a
little bit of short-term pain in exchange for some long-term benefit —
in his view a healthy reordering of the global economy,” she said. “In
politics, because we have elections every two years for Congress —
saying that this is going to be very good for you way down the road is a
tough sell for a lot of voters.”
But the administration — beyond unspecific warnings about
short term disruption — still isn’t conceding Americans will face price
hikes.
“Foreign nations who have to sell here are going to lower
their prices and then the next thing they’re going to do is continue to
manipulate their currency, so our currency is going to get stronger,”
Navarro told CNN’s Phil Mattingly. “We’re going to have more purchasing
power for the imports. That’s going to offset it.”
These predictions could be a trap for the White House. Past
presidents have irrevocably severed trust with the public when they
insisted on a reality that voters could perceive was false. This
includes Lyndon Johnson’s insistence on expanding a war he was losing in
Vietnam, George W. Bush’s denial when victory in Iraq degenerated into
an insurgency and Joe Biden’s insistence that the chaotic exit from
Afghanistan was a success.
Judging by their remarks on Thursday, Trump and Vance risk
going down a similar road even as their situation promises to get worse.
“Usually, when you have a terrible stock market experience,
it’s because a bank fails or there’s a pandemic or there’s a hurricane
or some other country does something,” former Treasury Secretary
Lawrence Summers told CNN’s Hunt.
“We don’t have these kind of stock market responses in
response to polices that the president of the United States is proud of.
That is something that is entirely without precedent and it is
extremely dangerous.”
