Wall Street is puking big time, and the sell buttons are working overtime whenever the word “tariff” passes from Donald Trump’s lips. If you listen to the fat cat community long enough, you’d think Trump has been in office four years rather than four weeks, and that a small trade surcharge on a car from Mexico is leading us into economic Armageddon.
I’m no fan of tariffs for lots of reasons, including I hate paying too much for stuff, but I’ve also taken enough econ and studied markets long enough to know that they’re not the end of the world as we know it. I also know that the Trump economic plan is much more than tariffs; it’s about tax cuts, deleveraging the federal government’s involvement in the private sector and allowing the private sector to thrive.
It’s about unleashing the animal spirits of the US entrepreneur through deregulation.
Yes, what Trump wants to do — and has to do given the load he was left with — was always destined to create some short-term pain for the long-term gain.
So maybe try and ignore the stock market for a bit — or take some of your gains if you’re in it. Either way, if history is any guide, the real economy that most people care about is poised to do just fine given what Trump is planning, and eventually, so will the stock market.
Think of the current US economy as a junkie weaning himself off heroin, which is never easy. It’s been addicted to the heroin of government spending — both monetary and fiscal — for so long that we are running $2 trillion deficits when the economy is growing near 3% with low unemployment as sleepy Joe Biden spent money we didn’t have.
The Trump people tell me Biden injected as much as $250 billion into the economy in his final months to get Kamala Harris elected. Again, markets did well, but inflation remained high throughout his presidency, a tax on the working class. Rich people didn’t care because they can speculate their way around the high price for staples like eggs through stocks and other inflated financial assets.
Working class folks not so much or Harris would be president today.
An excuse to correct
Taking away government spending is now giving that aforementioned junkie the shakes, ditto for Trump’s trade policies. Countries routinely take advantage of us on trade. China steals our intellectual property. Mexico exports everything from cars, trucks, to migrants and fentanyl. Our deficit with this country and more keeps growing.
Trump was left with quite a mess that most financial types don’t appreciate because of their obsession with the markets. On top of that, stocks had set themselves up for what we’re seeing now because the indices were being powered by a handful of companies’ shares, mostly tech- and AI-related, that were looking for an excuse to correct.
Tariffs became that excuse.
Getting used to Trump was always going to be a bit nauseating for the markets and the fat cat set because $2 trillion deficits, $37 trillion in debt, mindless spending, open borders, massive trade deficits, inflation, etc., demands an economic 180, and markets hate uncertainty. Plus, the Trump people aren’t doing themselves any favors mentioning the word “tariff” every 30 seconds instead of emphasizing the tax cuts and deregulation that businesses and markets love.
They need to give the country a little history lesson. The markets hated the uncertainty of the early years of the Reagan presidency. The economy experienced plenty of pain during a three-year transition when the Reaganistas cut taxes and de-emphasized government.
As history shows, it all paid off for the American workers and even for the fat cats in the stock market.
So, ignore puke.
