Politically, and to a lesser degree economically, America has just endured one of the most insane weeks of one of the most insane decades in its history. Last Wednesday, aka “Liberation Day,” Trump announced a trade war against the entire world. The stock market cratered, shedding $10 trillion in just three days. A recession seemed inevitable; a global depression loomed. And then, as quickly as Trump launched the war, he retreated: On Wednesday, as the new tariffs took effect, he announced he was suspending the most severe “reciprocal” tariffs for 90 days. The stock market promptly shot back up.
The market’s crash and rebound were both the result of widespread delusion. Trump had promised on the campaign trail, and reiterated after taking office, that he would impose crushing tariffs on other countries, including U.S. allies. And yet, the financial industry has consistently deluded itself into believing Trump would never do such a thing, and then it acts utterly shocked when the president keeps his promise—first with his tariffs on China, Mexico, and Canada, and then his broader tariffs. Trump states his plans, Wall Street largely shrugs, and then when the tariffs take effect, the markets plunge. When Trump backtracks with a “pause,” the markets snap back—based on the delusion that Trump won’t ultimately impose such damaging tariffs.
He may be a political opportunist with a general disinterest in the mechanics of policy and governance, but if you spend even a small amount of time listening to Trump, or know his long history of spouting off on politics, you know he does have a few longstanding core beliefs. One is that immigrants ruin America. Another is that Black people are criminals. And a third is that tariffs are beautiful. For decades, first as a private citizen and then as a politician, Trump has consistently and enthusiastically touted tariffs as an economic cure-all that will revitalize the many towns and cities that have never recovered from America’s transition to a post-industrial economy, making the country unimaginably rich—and without anyone having to pay taxes.
It’s possible, of course, that Trump’s latest tariffs would have triggered a sell-off, albeit a more gradual one, even if they had been anticipated. But Wall Street—where the job is literally to assess risk—was particularly blindsided, so much so that Bill Ackman, a billionaire hedge fund manager and one of Trump’s most prominent online defenders, apologized for misjudging the president. I “assumed economic rationality would be paramount,” he tweeted in a post that warned of a coming “economic nuclear winter.” Has he paid even the slightest attention to Trump’s statements about tariffs? Has he listened to Trump’s economic team defend those tariffs? There is no “economic rationality” to speak of. These people are morons. And so, it seems, are the denizens of Wall Street.
We have not reverted to a world before the president attempted to blow up the global trade system. For one thing, the U.S. still blanket 10 percent tariff on goods coming from overseas are still in effect, a substantial figure by global standards that still marks a significant to most pre-“Liberation Day” tariffs. Several nations, many of whom have been close economic partners, have concluded that the U.S. can no longer fulfill its longstanding role as the pillar of the global financial system. In Canada, for instance, the prime minister is essentially calling for other nations to build an international trading system that disempowers, or perhaps even excludes, its southern neighbor.
Trump may have engaged in a tactical retreat on tariffs, but it would be foolish to conclude that his thinking has shifted. There’s no reason to be confident that the tariffs won’t kick in 90 days from now, and we can be sure that this interim period will fuel yet more economic chaos. The odds of a recession this year are still above 50 percent. Our allies are still pissed at us. China looks more powerful than ever. But on Wall Street, all that mattered was that a very bad situation had briefly improved—and that, for the first time in days, there was money to be made.
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