WASHINGTON DC – US President Donald Trump spent the weekend urging his fellow Americans to “HANG TOUGH” in the face of the reverberating economic crisis sparked by his decision to declare a global trade war. But as hundreds of thousands of people took to the streets of towns and cities across the country to protest against his administration’s various policies, Republicans on Capitol Hill joined the nation’s corporate titans in becoming increasingly antsy about Trump’s trade brinksmanship.
The two-day rout that erased over $6 trillion(£4.66trn) in market value shows no sign of abating, as the President spent the weekend golfing in Florida and doubling down on what he characterised on social media as his “ECONOMIC REVOLUTION”. That phrase underscores the fact that Trump is not only using a protectionist playbook to steer economic policy down a path that the United States has eschewed since the 1930s. He is also throwing out decades of Republican Party orthodoxy about the benefits of free trade and the evils of trade barriers.
Trump arrives at Trump National Golf Club in Florida on Sunday (Photo: Alex Brandon/ AP)
Senator Ted Cruz of Texas is among those prominent Republicans clinging to Ronald Reagan’s belief that – as the former President put it in his 1967 Inaugural Address when he was sworn in as Governor of California – “freedom is a fragile thing and it’s never more than one generation away from extinction”. Like Reagan, Cruz argues that trade barriers are antithetical to America’s economic health, and a direct threat to the freedoms that Republicans have traditionally held dear.
On Friday’s edition of his podcast, Cruz warned Republicans that any extended use of tariffs as a governing proposition in the realm of trade would lead to the party being wiped out in next year’s mid-term elections. “There are voices within the administration that want to see these tariffs continue for ever and ever”, he said, without naming Trump. But, he insisted, a full-blown trade war “would destroy jobs here at home and do real damage to the American economy…. I want ‘Liberation Day’ to succeed. But success means lower tariffs both here and abroad”.
Republican senator Ted Cruz is becoming increasingly concerned about Trump’s trade brinksmanship (Photo: Win McNamee/Getty Images)
Cruz is not the only Republican threatening to break with the White House. Senator John Kennedy of Louisiana, normally a vigorous Trump defender, told Fox News on Friday that “we’re in uncharted waters” and that the President’s approach was risky. “Tariffs are like whisky”, he told Fox. “A little whisky under the right circumstances can be refreshing. Too much whisky under the wrong circumstances, and you end up drunk as a goat”.
But all of that ignores Trump’s insistence that he’s leading not only a trade war, but a broader policy revolution. Last Wednesday, as he unveiled his plan to tariff virtually every other country and territory on earth, Trump spoke wistfully about America in the 1880s, describing the United States of that era as “a tariff country… so wealthy, in fact, that they established a commission to decide what they were going to do with the vast sums of money they were collecting”. As he has done in the past, Trump even posited the idea of eventually scrapping income tax, and funding the government entirely out of tariff revenues, an idea that the vast majority of respected economists dismiss as fanciful.
Protesters attend a rally to demonstrate against Trump on the National Mall in Washington DC on Saturday (Photo: Anna Moneymaker/Getty Images)
Trump’s senior lieutenants spent the weekend making entirely false claims about the state of the economy that they inherited from former President Joe Biden. Deputy White House Chief of Staff Stephen Miller was ubiquitous on television, insisting falsely that America was in a “depression” when Trump took over and that the economy “was in a state of calamity and catastrophe”.
In fact, when Trump took office in January unemployment was at 4 per cent (versus 4.2 per cent last month) and the country secured 2.8 per cent of GDP growth during Biden’s final year in office. In light of Trump’s policies, investment bank Goldman Sachs has cut its growth forecast for this year to a pitiful 1 per cent and now says there is 35 per cent chance that America will enter a recession, up from its earlier forecast of 20 per cent. “The risk from… tariffs is greater than many market participants have previously assumed”, the bank warned.
Key to Trump’s “revolution” are not only tariffs, but also the tax cuts that the President argues will stimulate economic growth and help the country navigate the current turmoil. On Friday, Republicans in the Senate took the first steps in advancing the President’s agenda. But Kennedy argued that it could still take until the middle of May for the full package of legislation to reach the President’s desk. That suggests more than a month of Wall Street’s roller-coaster lies ahead.
While the White House insists that the President is focused on Main Street instead, there is a direct connection between the two thoroughfares. Millions of Americans will have spent the weekend reviewing their retirement and college savings accounts – all tied up in the stock market – and evaluating the scale of their losses. Hundreds of thousands of them also took to the streets to join the largest protests so far against the administration. Trump’s revolution hinges on the nation agreeing to “HANG TOUGH”, but its patience is already being put to a very costly test.