Tag: U.S. stock market

Washington Post’s Criticism of Trump’s Tariffs

A Washington Post editorial voices criticism of Trump’s policy and comments about tariffs.

“The market never lies. It is often mistaken, as it was during the post-election honeymoon, when investors seemed to assume Donald Trump didn’t really mean it about tariffs. But it always tells you exactly what it thinks.”

“Right now, it is thinking that the stiff tariffs Trump has imposed will cost American companies, and the economy, dearly. Markets have plummeted since Trump announced new levies on Canada, Mexico and China, erasing nearly all gains since his election. The president might think that “trade wars are good, and easy to win,” but investors disagree.”

“In this, they reflect not only the consensus among economists but also the realities facing American businesses and consumers.”

“’Customers are pausing on new orders as a result of uncertainty regarding tariffs,’ a transportation equipment company reported. ‘The incoming tariffs are causing our products to increase in price,’ a machinery manufacturer said. A maker of electrical equipment added, ‘The uncertainty about tariffs keeps us cautious on spending, despite the strong sales right now.’”

“’Regime uncertainty’ is the economic term for worries like these. Investments take time to pay off, and when government policy constantly shifts, companies have a hard time telling whether an investment will be worth it. Investors, too, get nervous about the rules governing businesses and those surrounding the taxation of their profits. By slowing investment and innovation, regime uncertainty stifles the economy and makes it harder to attract foreign investment.”

The ” president’s frequent shifts in policy stand to have a chilling effect. In the past month alone, tariffs have been imposed, delayed, reimposed, and now — at least for some categories of goods — delayed for another month. Adding to the unease are the administration’s attacks on the justice system, which foreign investors, especially, are bound to be watching. To repeat: There is a reason that so much foreign debt is structured to be governed by U.S. law. Signaling that America’s trade policies could change at any time, and that its justice system is vulnerable to political influence, risks the country’s position as a global destination for securities issuance and investment capital.”

“The haste with which this year’s tariffs have been imposed, and Trump’s dubious rationales for imposing them, justifiably make people worry that the current trade rules could be rewritten again and again.”

“And while companies could resolve this uncertainty once and for all by making, and sourcing, products in the United States, this is a costly proposition — too costly, in some cases, to be worthwhile. If domestically made products are more expensive than foreign ones, investments might not pencil out, and some exporters might find themselves priced out of global markets. This retrenchment will ripple through an economy that already looks fragile.”

“On the same day that the Trump administration announced the tariffs would go into effect, the Federal Reserve Bank of Atlanta said it had revised its estimate of first quarter gross-domestic product downward, to -2.8 percent. Consumers say they are nervous about inflation, job prospects and, yes, tariffs.”

“[M]anufacturers think abrupt changes in trade policy are bad for business.”

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Editorial,  The market’s grim view of tariff shenanigans, Wash. Post (Mar.7, 2025).

 

 

 

 

 

 

 

Wall Street Journal’s Criticism of Trump’s Tariff Decisions and Analysis of His Values 

Wall Street Journal’s two recent editorials have criticized President Trump’s tariff decisions and the Journal has offered commentary on Trump’s State of the Union address to the Congress and the opinion of a Journal columnist (William Galston) on how Trump sees the world.

Editorial: “Trump Takes the Dumbest Tariff Plunge”[1]

 “President Trump likes to cite the stock market when it’s rising as a sign of his policy success, so what does he think about Monday’s plunge? The Dow Jones Industrial Average took a 650-point header after he announced that he’ll hit Mexico and Canada on Tuesday with 25% tariffs.”

“Mr. Trump wants tariffs for their own sake, which he says will usher in a new golden age.”

“We’ve courted Mr. Trump’s ire by calling the Mexico and Canada levies the ‘dumbest’ in history, and we may have understated the point. Mr. Trump is whacking friends, not adversaries. His taxes will hit every cross-border transaction, and the North American vehicle market is so interconnected that some cars cross a border as many as eight times as they’re assembled.”

“Mr. Trump is volatile, and who knows how long he’ll keep the tariffs in place. Retaliation that hits certain states and businesses may also cause him to reconsider sooner than he imagines. Investors are trying to read this uncertainty as they also watch growing evidence of a slowing U.S. economy. Unbridled Tariff Man was always going to be a big economic risk in a second term, and here we are.” (Emphasis added.)

Editorial: “Trump’s Tariffs Whack Trump Voters”[2]

“President Trump won the Presidency a second time by promising working-class voters he’d lift their real incomes. Which makes it all the more puzzling that he’s so intent on imposing tariffs that will punish those same Americans.”

“Tariffs are taxes, and Mr. Trump’s latest tariffs are estimated to be about an annual $150 billion tax increase. Taxes are antigrowth. That’s the message investors are sending this week since Mr. Trump let his 25% tariffs on Canada and Mexico take effect. The President also raised his 10% tariff on China by another 10%. Canada and China retaliated, while Mexico is holding off until Sunday.”

“The border taxes, and the uncertainty they bring, are weighing on growth and consumer confidence. The Dow Jones Industrial Average is down 3.4% since Mr. Trump took office, erasing the ebullient gains that followed his November election.”

“Energy prices will rise too. Mr. Trump implicitly conceded this by reducing his tariffs to 10% on Canadian energy imports. Despite the U.S. shale fracking boom, constraints on pipeline capacity mean the Midwest and Northeast depend heavily on Canada for natural gas. That means heating bills will rise in Trump country. So will electricity prices.”

“The U.S. imports about 3,315 gigawatt hours of electricity on average from Canada each month—enough to power about 3.7 million homes. These flows help stabilize the grid and lower prices in the Northeast and Midwest. New England’s grid operator estimates the tariffs could cost the region between $66 million and $165 million a year. Energy makes up 40% of primary aluminum producers’ costs. Several Midwest foundries have closed in recent years amid rising energy prices. The Trump tariffs will harm the very workers he claims to be trying to help.”

“They will also cause pain at the pump. The U.S. is a net oil exporter, but it still imports about 6.5 million barrels a day of crude, mostly from Canada and Mexico. That’s because refineries in the Gulf Coast and Midwest process heavy grades. It would cost billions of dollars to retrofit them to process light blends from U.S. shale. Drivers of pickup trucks in the Midwest (where refineries depend on Canadian crude) are likely to suffer the most pain.”

“Speaking of which, we recently told you about an Anderson Economic Group analysis that estimated the 25% tariffs would raise the cost of a pickup assembled in North America by $8,000. Heavy-duty truck prices may also surge as they rely on parts from Canada and Mexico.”

“The President also professes to love American farmers, but he apparently loves tariffs more. U.S. farmers are already being squeezed by low crop prices and inflation. The American Farm Bureau Federation (AFBF) says farmers are losing money on almost every major crop planted for the third straight year.”

“Tariffs will increase their pain. About 85% of the U.S. potash supply for fertilizer is imported from Canada. China is hitting U.S. farm exports with a 15% tariff, which will let farmers in Brazil and Australia grab market share. “Even more costs and reducing markets for American agricultural goods could create an economic burden some farmers may not be able to bear,” AFBF President Zippy Duvall said Tuesday.”

“Mr. Trump’s tariff spree is the triumph of ideology over, well, common sense. Let’s hope the President soon comes to his senses.” (Emphasis added.)

Commentary on Trump’s State of Union Speech[3]

“Mr. Trump is volatile, and who knows how long he’ll keep the tariffs in place. Retaliation that hits certain states and businesses may also cause him to reconsider sooner than he imagines. Investors are trying to read this uncertainty as they also watch growing evidence of a slowing U.S. economy. Unbridled Tariff Man was always going to be a big economic risk in a second term, and here we are.”  (Emphasis added.)

Comments on Trump-Zalensky Meeting[4]

William Galston, a W.S.J. opinion columnist (politics and ideas), has offered his thoughts on what we have learned about Trump’s approach to foreign policy from his recent meeting with Volodmyr Zalensky and other episodes.

“It’s clear that the concept of a ‘rules-based international order’ is anathema to Mr. Trump. After all, following rules may force you to do something you don’t want to and may impose short-term costs on your country. Mr. Trump seems to think the current rules don’t promote America’s long-term interests.” (Emphasis added.)

Trump’s “aim, it seems, is to maximize his freedom of action at all times. This explains why he is inclined to see alliances as burdens. Bringing your allies along with you takes time, patience and compromise. It constrains your will. Why bother? Better to deal one-on-one with friend and foe alike.” (Emphasis added.)

“Mr. Trump’s approach to foreign policy is amoral—a relentless pursuit of self-interest. Appeals to principles leave him cold, as do international relationships based on ‘shared values.’ His instincts leave him unable to understand why so many people on both sides of the Atlantic are committed to an alliance of Western democracies against the rising tide of antidemocratic forces.” (Emphasis added.)

“Indeed, it’s not clear that Mr. Trump prefers democracy to autocracy. He has praised autocratic leaders—Vladimir Putin, Xi Jinping, even Kim Jong Un. He admires their strength and envies their ability to act without pesky legislators and critical reporters.” (Emphasis added.)

“Strength and weakness replace right and wrong in Mr. Trump’s lexicon. What matters most is leverage. If you have it, use it to the hilt. If you don’t, you must settle for what you can get. The merits of your position don’t matter. Underscoring this point, Mr. Trump has ‘paused’ aid to Ukraine in a move to weaken its hand and force Mr. Zelensky into peace talks with Russia.” (Emphasis added.)

“Speaking of strength: Mr. Trump evidently believes that there are three great powers—China, Russia and the U.S.—and that establishing satisfactory relations among them takes priority over collateral damage to smaller countries. The idea is to return to ‘spheres of influence’: Ukraine and the ‘near abroad’ for Russia, and Panama, Canada and Greenland for the U.S.” (Emphasis added.)

“And what for China? In the ‘great powers’ context, it’s not surprising that Elbridge Colby, Mr. Trump’s nominee for undersecretary of defense for policy, told the Journal that although the U.S. should be prepared to defend Taiwan, the island ‘isn’t itself of existential importance to America.’ And as Chinese pressure on the Philippines intensifies, I wonder whether Mr. Trump will honor America’s longstanding mutual-defense treaty with Manila.” (Emphasis added.)

“What is of existential importance, it seems, is economics. Mr. Trump’s view is that just about every country is ‘ripping us off’ in trade. The size of the trade deficit is proof; never mind what economists say causes it. Our allies are ripping us off in defense as well. Helping them defend themselves, he thinks, costs the U.S. without attendant benefits. Mr. Trump knows the cost of everything and the value of nothing.” (Emphasis added.)

“Nonsense, his supporters reply. Mr. Trump is pursuing peace. What could be a higher value than this? But there are different kinds of peace. Lincoln spoke of a ‘just and lasting peace.’ Richard Nixon pursued ‘peace with honor.’ By contrast, Neville Chamberlain, after negotiating with Hitler in Munich in 1938, claimed he had secured ‘peace for our time.’ In reply, Winston Churchill told Chamberlain, ‘You were given the choice between war and dishonor. You chose dishonor, and you will have war.’”

“On Monday Prime Minister Keir Starmer delivered a stirring speech in the British House of Commons, pledging large increases in the U.K. defense budget and detailing his efforts to forge a coalition of the willing in defense of Ukraine. His remarks garnered widespread praise, including from opposition party leaders and citizens across the U.K. Mr. Starmer’s practicality and moral clarity had made them proud to be British.”

“But Mr. Starmer was forthright: Even with maximum effort from Europe, his plan to secure Ukraine against future Russian aggression couldn’t succeed without an American ‘backstop.’ When the prime minister asks for one, how will Mr. Trump reply?”

Conclusion

This blogger was pleasantly surprised by these cogent remarks from the Wall Street Journal, which has the reputation of being a newspaper allied with the Republican Party.

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[1] Editorial, Trump Takes the Dumbest Tariff Plunge, W.S.J. (Mar. 3, 2025).

[2] Editorial, Trump’s Tariffs Whack Trump Voters, W.S.J. (Mar. 4, 2025).

[3] Andrews, Gomez, & Dapena, An Annotated Fact-Check and Analysis of Trump’s Speech to Congress, W.S.J. (Mar. 5, 2025).

[4] Galston, The Zalensky Spat Shows Us How Trump Sees the World, W.S.J. (Mar. 4, 2025).