The Good News About Trump’s Tariffs

By Jonathan Chait

Wednesday, April 02, 2025

 

All Donald Trump had to do was start telling people the economy was good now. Take over in the middle of an economic expansion and then, without changing the underlying trend line, convince the country that you created prosperity. That’s what he did when he won his first term, and it is what Democrats expected and feared he would do this time.

 

But Trump couldn’t do the easy and obvious thing, apparently because he did not view his first term as a success. He considered it a failure, and blamed the failure on the coterie of aides, bureaucrats, and congressional allies who talked him out of his instincts, or ignored them. The second term has been Full Trump, as even his most delusional or abusive whims are translated immediately into policy without regard to democratic norms, the law, the Constitution, public opinion, or the hand-wringing of his party.

 

That is why Trump’s second term poses a far more dire threat to the republic than his first did. But it is also why his second term is at risk of catastrophic failure. Nothing illustrates this more clearly than Trump’s insistence on sabotaging the U.S. economy by imposing massive tariffs.

 

This afternoon, in an event the administration hyped as “Liberation Day,” Trump unveiled his long-teased plan to impose reciprocal trade restrictions on every country that puts up barriers to American exports. Although at least some economists would defend some kinds of tariff policies—such as those targeted at egregious trade-violating countries, or those designed to protect a handful of strategic industries—Trump has careened into an across-the-board version that will do little but raise prices and invite reprisal against American exports. As an indication of the mad-king dynamic at play, the new plan imposes a 20 percent tariff on the European Union, partly in retaliation against the bloc’s value-added tax system—even though the VAT applies equally to imports and domestic goods and is therefore not a trade barrier at all. U.S. stocks, which have fallen for weeks in anticipation of the tariffs, plunged even more sharply after Trump’s announcement.

 

Trump would not be the first president to encounter economic turbulence. But he might become the first one to kill off a healthy economy through an almost universally foreseeable unforced error. The best explanation for why Trump is intent on imposing tariffs is that he genuinely believes they are a source of free money supplied by residents of foreign countries, and nobody can tell him otherwise. (Tariffs are taxes on imports, which economists agree are paid mostly by domestic consumers in the form of higher prices.)

 

He has compounded the unavoidable damage to business confidence of any large tariff scheme by floating his intention for months while waffling over the details, paralyzing business investment. Even taken on its own terms, a successful version of Trump’s plan would require wrenching dislocations in the global economy. The United States would need to create new industries to replace the imports it is walling off, and this investment would require businesses to believe not only that Trump won’t reverse himself but also that the tariffs he imposes are likely to stay in place after January 20, 2029.

 

If businesses don’t believe that Trump will stick with his tariffs, the investment required to spur a domestic industrial revival won’t materialize. But if they do believe him, the markets will crash, because Trump’s tariff scheme will, by the estimation of the economists that investors listen to, produce substantially lower growth.

 

Probably the likeliest outcome is an in-between muddling through, with slower growth and higher inflation. Even Trump’s gestures toward sweeping tariffs have already made the economy wobble and lifted inflationary expectations. At this point, getting back to the steady growth and cooling inflation Trump inherited will require a great deal of luck.

 

Why didn’t anyone around Trump talk him out of this mistake? Because the second Trump administration has dedicated itself to filtering out the kinds of advisers who thwarted some of his most authoritarian first-term instincts, as well as his most economically dangerous ones. The current version of the national Republican Party, by contrast, is dedicated to the proposition recently articulated by one of Elon Musk’s baseball caps: Trump was right about everything.

 

In this atmosphere, questioning Trump’s instincts is seen as a form of disloyalty, and Trump has made painfully evident what awaits the disloyal. As The Washington Post reports, “Business leaders have been reluctant to publicly express concerns, say people familiar with discussions between the White House and leading companies, lest they lose their seats at the table or become a target for the president’s attacks.” Asked recently about the prospect of tariffs, House Speaker Mike Johnson revealingly said, “Look, you have to trust the president’s instincts on the economy”—a phrase containing the same kind of double meaning (have to) as Don Corleone’s offer he can’t refuse.

 

This dynamic allows Trump to do whatever he wants, no doubt to his delight. But the political consequences for his administration and his party could be ruinous. Public-opinion polling on Trump’s economic management, which has always been the floor that has held him up in the face of widespread public dislike for his character, has tumbled. This has happened without Americans feeling the full effects of his trade war. Once they start experiencing widespread higher prices and slower growth, the bottom could fall out.

 

A Fox News host recently lectured the audience that it should accept sacrifice for Trump’s tariffs just as the country would sacrifice to win a war. Hard-core Trump fanatics may subscribe to this reasoning, but the crucial bloc of persuadable voters who approved of Trump because they saw him as a business genius are unlikely to follow along. They don’t see a trade war as necessary. Two decades ago, public opinion was roughly balanced between seeing foreign trade as a threat and an opportunity. Today, more than four-fifths of Americans see foreign trade as an opportunity, against a mere 14 percent who see it, like Trump does, as a threat.

 

As the political scientists Steven Levitsky and Lucan Way point out, “Authoritarian leaders do the most damage when they enjoy broad public support.” Dictators such as Vladimir Putin and Hugo Chávez have shown that power grabs are easier to pull off when the public is behind your agenda. Trump’s support, however, is already teetering. The more unpopular he becomes, the less his allies and his targets believe he will keep his boot on the opposition’s neck forever, and the less likely they will be to comply with his demands.

 

The Republican Party’s descent into an authoritarian personality cult poses a mortal threat to American democracy. But it is also the thing that might save it.