Trump can complain all he wants – but he can't stop his own economic mess

The Guardian

20-05-2025

With his usual threats, Donald Trump is trying to ward off the dire reality that he has created and is bearing down on him. He can clamp migrants in foreign gulags, coerce white-shoe law firms into becoming his pro bono serfs and try to simply erase the National Endowment for the Humanities, but he can't rescind his harm to the economy. Trump can slash the National Weather Service, but he can't stop the storm he's whipped up. He's shouting into the wind at his twister.
No matter how much he might lower his draconian tariffs after his 90-day breathing spell, the velocity of damage is just building. It's not a mistake that can be rectified. There's no do-over. It's not a golf game at one of his clubs where he gets endless mulligans and is declared the champion. Nor does Trump really want to draw back completely from his tariffs as if he never had proudly displayed his 'Liberation Day' idiot board.
When the Walmart CEO inevitably announced that prices would have to be raised as a result of Trump's tariffs, Trump warned: 'Between Walmart and China they should, as is said 'EAT THE TARIFFS,' and not charge valued customers ANYTHING. I'll be watching, and so will your customers!'
Trump has falsely insisted that tariffs are levied on foreign importers. But Walmart demonstrated the indisputable fact that tariffs are price increases passed on to consumers. They are a tax. Trump is furious at the early indication of the renewed inflation and price rises that are coming. His natural response, of course, is an attempt at intimidation.
The tariffs are a shakedown by which Trump could exercise his control over corporations that must scrape and bow before him, asking for targeted relief in exchange for, perhaps, payments to his personal political action committee, or, perhaps, throwing money into the kitty of his various financial endeavors, his crypto firm and meme-coin scheme. According to his wishful thinking, businesses should 'eat the tariffs' to cover up his falsehood and maintain his popularity. For his sake, shut up and 'eat' it. Trump is at war with the corporations' bottom line.
He can fool all of the people some of the time, and some of the people all of the time, but he can't fool the bond market any of the time. When Moody's Ratings downgraded the US credit rating, the Trump White House put out a statement attacking Moody's 'credibility' while blaming 'Biden's mess'. Moody's reasons were an oblique criticism of Trump's pending 'big, beautiful bill' for massive regressive tax cuts in addition to his tariffs, which have led to the suspension of any further cuts in interest rates from the Federal Reserve.
Blaming Biden, in any case, hasn't been cutting it with public opinion. Only 21% of Americans attributed the state of the economy to Biden's policies in a poll in early April conducted by CBS News/YouGov. In Trump's first hundred days alone, he denigrated Biden at least 580 times, according to NBC News. Trump sought to make him the scapegoat for his own policies. But the public is certain that Trump and nobody else owns the economy as he desperately tries to restore it to where Biden bequeathed it to him, with inflation and interest rates falling. And, now, very ill, Biden can no longer serve as a convenient target.
Even if, after Trump's 90-day pause on tariffs, he cuts them in half, the result will be devastating to small businesses, family farms and many large corporations. Nearly 90% of American small businesses rely on imported goods. More than 20% of the US agricultural sector depends upon exporting its products, according to the US Department of Agriculture. US manufacturers rely on imports for more than 20% of machinery, products and components. More than 41m American jobs are linked to imports and exports, one in five, according to the Business Roundtable. That does not include the multiplier effect of millions, if not tens of millions, of additional jobs created as a result.
The supply chain has been severely distorted. For 12 hours on 9 May, zero cargo ships – none – not one – departed from China to the ports of Los Angeles and Long Beach, the two major US ports for Asian imported goods. The more than $906bn trucking industry, which had finally regained stability after the Covid disruption, faces another shock. 'Trump trade war is wrecking hope for 2025 US trucking rebound,' reads the headline on a Reuters story.
The uncertainty factor that Trump has introduced has frozen all planning. The auto companies, among others, have given up issuing any guidance to investors. Their earnings are plunging, their suppliers in chaos. Nobody can predictably produce, order or hire, and so businesses are in a state of suspension. The prospect of a slowdown has already depressed oil prices to the point where it will soon not be profitable to drill at all. In April, Trump called critics of his tariffs 'scoundrels and frauds', but retailers do not know how to price goods, how much to raise them to sustain often razor-thin profit margins. They face a Hobson's choice of pricing themselves out of their markets or absorbing the costs and going bust.
The head of Trump's council of economic advisers, Kevin Hassett, cheerfully announced on 12 April that he expected the gross national product to grow by 2% to 2.5% in the first quarter of this year. On 30 April, the Bureau of Economic Analysis reported that GDP had fallen by 0.3% in the quarter.
Even after Trump agreed to drop his 145% tariff on China to 30%, Paul Krugman points out that 'we're still looking at a shock to the economy seven or eight times as big as Smoot-Hawley, the previous poster child for destructive tariff policy'. Krugman states that on the optimistic lower end, 'we'd expect Trump's tariffs after last weekend's retreat on China to cut overall US trade by roughly 50%. Trade with China, which would have been virtually eliminated with a 145% tariff rate, would fall by 'only' around 65% with a 30% tariff.'
The result will be devastating, with rising inflation, higher unemployment, shortages, and lower growth and investment. In short, the economy will plunge into stagflation for the first time since the 1970s. Then, the phenomenon was the outcome of the Opec oil shock. This is the Trump shock, not the consequence of an external factor, but entirely self-induced through a delusion. Does he care? 'Well,' Trump said, 'maybe the children will have two dolls instead of 30 dolls. So maybe the two dolls will cost a couple bucks more than they would normally.'
All of what's coming was foreseeable. This is not a case in which unintended consequences suddenly emerged without advance warning, like in the 1970s. Here the red lights flashed; Trump raced through them.
The uncertainty he's injected is not a byproduct of happenstance. Uncertainty is the aspiring dictator's pre-eminent prerogative. Trump resents any limitation on his ability to act however he wishes. The ultimate privilege of a dictator is to be at liberty to be impulsive. The more unpredictable he is, the more he is regarded as omnipotent.
Trump has no real policies. There is no actual analysis, no expertise, no peer review. He brandishes atavistic symbols as primitive representations of his unrestrained power. Lowering or raising the tariffs are functionally equivalent if they are perceived as enhancing the perception of his potency. The merits are of no interest. Policies, such as they are, are measured by how well they gild his lily. The more unpredictable he is, the more he thinks of himself and thinks others think of him as almighty.
For Trump, experience is meaningless. He never learns. Even his existential moments are forgotten, like his near-death from Covid. He deduces no lessons. It doesn't inform his health policies, for example, which he's turned over to oddballs and snake-oil salesmen led by the chief crank with roadkill in his freezer and a worm in his brain, Robert F Kennedy Jr.
Trump's learning curve is a hamster's wheel. He goes 'round and 'round, repeating belligerent ignorance unaltered over decades. He's the hamster who thinks he's making progress if he receives attention. His solipsism is epistemological. Jared Kushner grasped its essence when he surfed on Amazon to find the one discredited economist, Peter Navarro, to provide sham formulas to justify Trump's preconceived tariff obsession.
Trump's psychological equilibrium requires the constant rejection of his responsibility for the abrasive reality he churns up. Confronting reality exacts fortitude, both politically and intellectually. He considers that a mug's game he must resist. His inner fragility is shielded by projecting images of muscular strength, now AI generated videos and pictures of himself produced by the White House communications team as a Jedi, a guitar hero (after Bruce Springsteen called him 'treasonous') and the Pope (the new Pope Leo IX does not much care for the social Darwinism of JD Vance).
Meanwhile, there must be a conspiracy theory to deliver up a scapegoat. That opens the door of the Oval Office for malicious fabulists to whom Trump is particularly susceptible and finds useful as his instruments to terrorize even his own staff. Enter loony Laura Loomer as his virtual national security personnel director with a portfolio in hand identifying six officials on the national security council to be purged, soon to be followed by the defenestration of the national security adviser Michael Waltz, who, rather than the thoroughly incompetent secretary of defense, Pete Hegseth, served as the scapegoat for the Signal chat group that invited in Jeffrey Goldberg, editor of the Atlantic.
A 9/11 truther, Loomer claimed the terrorist attack was 'an inside job.' During the 2024 campaign, Trump brought her to the 9/11 memorial service. Loomer said that if Kamala Harris won the White House it 'will smell of curry'. Marjorie Taylor Greene, the far-right member of the House from Georgia, assailed Loomer as an 'appalling and extremist racist'. 'You don't want to be Loomered,' Trump said. 'If you're Loomered, you're in deep trouble. That's the end of your career in a sense. Thanks, Laura.'
Trump famously can't accept the slightest criticism. He is armored against learning in any case. He is incapable of engaging in any self-examination for both emotional and cognitive reasons. It would be too upsetting even to contemplate. His whole being would become paralyzed if he were ever to suffer a bout of introspection. His system couldn't tolerate it. His brittle peace of mind requires his fabricated self-image to be constantly apple-polished and worshipped.
The split between Trump's anxious need for his cosseted appearance and the terrible reality he's making is his ultimate credibility gap. He must sustain a completely self-contained inner world or the walls start to close in.
Information must therefore be suppressed. When the intelligence community assesses that the Tren de Aragua gang is not being manipulated by the Maduro regime of Venezuela, which is the invented excuse for Trump's migrant round-up emergency, then fire the intelligence analysts or tell them to redo their report.
When the Democrats in the House attempted to bring up a bill to remove Trump's claim of a national security emergency for his tariffs – another mythical emergency – Republicans moved to block it in the rules committee. No vote, no debate. It's a disappearing act.
If the lying doesn't work, try intimidation. That is the rhyme or reason behind Trump's success in imposing his malignancy. But now he's created a reality he can't disguise or bully. The planets are hurdling into collision. He's done it to himself by himself.
The passage of his 'Big Beautiful Bill', with its extravagant tax cuts for the wealthy and deep cuts to Medicaid, wounding his white rural base, of which, depending on the county, are 25% to 40% dependent on the federal healthcare program, will spike the inflationary effect of his tariffs as well as the deficit. Republicans no longer uphold the pretense that their tax cut redistribution of wealth upward will actually lower the deficit by reducing revenue. Ronald Reagan's supply-side economics claims, originally dubbed voodoo economics by George HW Bush, in fact proved Bush prescient. Reagan's budget director, David Stockman, confessed that the supply side charade was a 'Trojan horse' for lowing the upper rate and was just a 'horse-and-sparrow' theory of 'trickle down.' Thus, Trump's potential legislative success will only deepen his crisis.
Donald turns his lonely eyes to the Federal Reserve to bail him out, like his father, Fred Trump, who always arrived in the nick of time to rescue him from his messes. Trump lies in capital letters: 'THE CONSENSUS OF ALMOST EVERYBODY IS THAT, 'THE FED SHOULD CUT RATES SOONER, RATHER THAN LATER.' There is no such consensus. The consensus is to the contrary.
Trump's begging shifts to threats. If Jerome Powell, the chairman of the Federal Reserve, doesn't do what Trump says he will be turned into the scapegoat: 'Too Late Powell, a man legendary for being Too Late, will probably blow it again – But who knows???'
But Powell is imperturbable. 'Higher real rates may also reflect the possibility that inflation could be more volatile going forward than in the inter-crisis period of the 2010s,' he said in his most measured tone on 15 May. 'We may be entering a period of more frequent, and potentially more persistent, supply shocks – a difficult challenge for the economy and for central banks.'
It's not Powell who is 'too late.' It's Trump. As Evelyn Waugh wrote in his novel Decline and Fall: 'Too late, old boy, too late. The saddest words in the English language.'
Sidney Blumenthal, a former senior adviser to President Bill Clinton and Hillary Clinton, has published three books of a projected five-volume political life of Abraham Lincoln: A Self-Made Man, Wrestling With His Angel and All the Powers of Earth