How Trump's reckless economic agenda united the country

That's because tariffs are deeply unpopular.

President Donald Trump is typically—and correctly—viewed as one of the most aggressive partisans ever seen in American politics, pitting his MAGA supporters and the Republican politicians he controls against the rest of us.

And yet, in recent weeks, his destructive and reckless economic agenda has succeeded in uniting wide swaths of the country. Consumers, investors, producers; the New York Times all the way to the Wall St. Journal; MSNBC to Fox News (!!) have all been coalescing on the same page. In every case, we’re seeing a backlash to the whiplash, growing consumer and investor pessimism, and a shift from the honeymoon to somewhere between the honeymoon’s over and I-want-a-divorce.

The Washington Post’s Aaron Blake pointed out that “Trump’s approval on the economy is worse than it’s ever been. Americans disapprove of his handling of it by 56 percent to 44 percent. CNN’s polling through Trump’s two terms had never before found a majority disapproving of Trump on the economy.”

Virtually every major news outlet has run lead stories asking whether we need to start worrying about a recession, citing market shops that have all raised their recession probabilities, ranging from 20 to 40 percent. The Wall St. Journal’s editorial board has been particularly vicious, inveighing against Trump’s “Dumb Trade War” raising the change of recession, and calling out the complicity of “Trump’s Republican Sycophant Caucus.”

This is actually less surprising than it may sound. The WSJ editorial board’s clientele are wealthy investors, not the MAGA faithful. And investors in U.S. equity markets have been getting slammed. I get that these two are not exactly sympathetic cases right now, but, according to Bloomberg, the Trump Slump has reduced the net worth of Musk and Bezos by $148 and $29 billion, respectively.

More surprising is Fox News. Fox correspondent Peter Doocy snarkily asked press secretary Karoline Leavitt if anyone in the White House was shorting the market. Before that press conference, he questioned on air how much sense it made for the White House to be pushing thousands into retirement while “retirement accounts are getting throttled.” Fox anchor Maria Bartiromo fruitlessly pleaded with Trump for greater economic certainty on behalf of businesses and investors spooked by his actions (hers was also the interview wherein Trump mused about a recession, leading to the above-the-fold headlines noted above).

The key, substantive question is: What is it about the Trump/Musk economic agenda that has generated such pervasive negativity across markets, sectors, and diverse media outlets? Clearly this isn’t a case like trickle-down tax cuts, which the Journal applauds and the Times boos.

The first answer is that for good, empirical reasons, sweeping tariffs are deeply unpopular. Trump representatives claim that tariffed countries will “eat” the tariffs, meaning they’ll lower the prices of their exports to offset the cost of the tariff tax to our consumers. But the empirical record is clear: tariffs are mostly passed on to consumers, which is why you have the Journal warning that the Mexico/Canada tariffs would spike the price tag for a North-American assembled SUV by $9,000 and a pick-up truck by $8,000.

That’s also why domestic producers object to the tariffs. Because auto production is so tightly integrated across North America, contrary to White House expectations (why they’re continually surprised by this is a very good question), the big three U.S. car companies flooded the zone, pleading with the White House not to implement the Mex/Can tariffs. As reported in the WSJ, the chief executive of Alcoa—the largest American aluminum producer—said the newly imposed 25% tariffs on all steel and aluminum imports would cost the firm “thousands of U.S. jobs.” That same outlet calls Ford’s popular F-150s the “Biggest Victims of Trump’s Metals Tariffs,” reporting that the tariff could add $400 to the price of the truck.

Why would executives from an industry that a tariff is supposed to help come out strongly against it? Because of what I call the “45% problem.” Alcoa produces domestic aluminum, but it uses a lot of imported inputs to do so. In fact, 45% of our goods imports are just such inputs, used in the production of American output. In other words, at this point in the evolution of globalization, broad tariffs are trying to unscramble an omelet.

This raises a highly relevant question, one that for all the digital ink spilled in covering the Trump Slump, has been underexplored. To its credit, the administration has taken to admitting that its agenda is unpopular for now and that it will be associated with transitional economic pain, perhaps even a downturn, which Commerce Secretary Howard Lutnick asserted would be “worth it.” But what, exactly, would make any of this worth it? What great economic outcomes await us on the other side of this chaos?

Besides Trump’s usual cascade of superlatives, there’s a curious and revealing lack of clarity on this point. They talk about strong GDP and job growth, but they inherited strong GDP and job growth. They talk about factories relocating from where they are to within our borders, but there’s simply no evidence that sweeping tariffs would have this effect. There isn’t even evidence that, were tariffs to move our trade deficit to a trade surplus (which they won’t), this would reverse the decline in our manufacturing job share. It certainly hasn’t done so in Germany, which has run trade surpluses for years (see figure here).

And, anyway, which factories are we talking about? Would it really help working-class people to get consumer-electronic assembly back from China or low-end textile production back from Asia and South America?

As noted, higher value-added manufacturing, such as auto-production, is already well integrated across North America, and Biden-era incentives were and still are crowding in billions in private investment to support higher-end production of microchips, batteries, electric vehicles, and more. Tariffs will only push the wrong way on those existing positives.

These insights get to the nub of the profound and unified dislike of the new administration’s economic agenda thus far. It’s saying first pain, then gain--but, and for good reason, few believe the gain. Eat your spinach and you’ll get dessert doesn’t work if there’s no dessert.

Like most Americans, I’m always glad to see disparate groups come together. I just wish we were coming together around something much better than Trump’s destructive economic agenda.

Jared Bernstein is the former chair of President Biden’s Council of Economic Advisers.

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