Since Donald Trump returned to the White House, Americans have grown used to high drama and rapid-fire headlines, as executive orders from the Oval Office have reshaped the US, from stripping back LGBTQ+ rights to gutting environmental regulations amid a sense that the US is slipping into authoritarianism.
But even against that backdrop, last week stood out, as Trump launched a fierce global trade war, imposed tariffs on its trading partners and triggered a global market meltdown, including on Trump’s own cherished Wall Street, where hundreds of billions of dollars of stock values evaporated.
Now, with all eyes nervously on Monday’s markets amid fears that the calamitous drops will continue, recession fears are mounting in America. JP Morgan analysts last week boosted their odds on a global recession to 60% and Americans are bracing for a return of inflation – the thing that above all else likely doomed Trump’s predecessor, Joe Biden.
But Trump remained unmoved by market drops and the global political condemnation – and even rare criticism from his own Republican party – saying now is a “great time to get rich” and that “China played it wrong – they panicked”.
On the streets of New York too, there was panic among some. In Washington Square Park, two sisters from Detroit were sitting on a park bench nearby the magnolia trees now in bloom. Kathleen, a primary school teacher, said she worried about whether there was a plan in place before changes are made.
“I want to be optimistic, but I live under an umbrella of worry with this administration,” Kathleen said. “I worry about the leadership, worry about a lack of continuity within the leadership, and so many changes at once without a plan.”
Her sister, Elizabeth, said she’d grown so anxious she’d stepped back from the news. “Our mum definitely had a huge jump in anxiety over this past week over her investments. She worked hard for those and she lives on them – a retired schoolteacher, and the drop in stocks very much impacts her day-to-day feeling of security.”
But Leo Ezekiel, 39, had a different perspective. As a financier, he wasn’t so worried about the stock markets. “It’s mostly that big corporations are deciding to sell off, and that will affect people, but in the long run, if stocks go down, it gives room for them to move up. It’s part of the game – and it’s always been like that in the United States.”
Trump made his move because he dreams of a return of American manufacturing might, convinced that tariffs will force factories home to the US, even though almost all economists think that is highly unlikely.
Yet, for such a momentous decision which has rattled the entire world economy, Trump reportedly only made up his mind at the last minute. According to the Washington Post, Trump didn’t arrive on an exact plan until just three hours before the Rose Garden announcement.
The “liberation day” announcement from the White House was a choreographed event, and his speech drew cheers from audience, largely made up cabinet members and blue-collar workers from manufacturing sectors that have for decades been economically pummeled by foreign competition. He offered up a vision that tariffs would bring back an older American economy, reopening factories and returning prosperity to ordinary workers.
“Taxpayers have been ripped off for more than 50 years,” Trump complained. “But it is not going to happen any more.”
Vice-President JD Vance said: “We’ve seen closing factories, we’ve seen rising inflation. We’ve seen the cost of housing so high that most Americans can’t afford to buy a home right now,” Vance said. “President Trump is taking this economy in a different direction.”
America’s largest trading partners, Mexico, Canada, China, Germany and Japan, were less enthusiastic, to say the least. China has announced retaliatory duties of 34%; the Canadian prime minister Mark Carney announced a limited set of counter-measures and called the US moves a “tragedy” for 80 years of “free and open exchange of goods and services”, led by the US.
The British PM Keir Starmer said nothing would be “off the table” when it came to the UK’s response to the tariffs – the UK imports $76.2bn in US services – but that “just as with defence and security” the world was “entering a new era” in economy and trade.
It is one where answers to even the most basic questions remain unknown. Will Trump’s tariffs on US trade partners go down as an act of economic self-sabotage? Or are tariffs merely a negotiating ploy to influence other nations – war by other means? Or is Trump finally getting to express his long-held economic view that the US has been making bad deals for decades?
The next few months may provide some clues. But, in an effort to get ahead of the US tariffs coming into effect next week, some effects were already being felt. The cost of flying goods into the US from China are reported to have risen 40% in four weeks. One car factory in Canada has already shuttered.
On Friday, Jerome Powell, the chair of the Federal Reserve, warned that Trump risked stoking even higher inflation and slower growth. “It is now becoming clear that the tariff increases will be significantly larger than expected,” he said. “The same is likely to be true of the economic effects, which will include higher inflation and slower growth.”
As the financial markets continued to convulse on Friday, the Washington Post reported that Trump is unbowed by negative headlines, criticism from foreign leaders, and was determined to listen to a single voice to secure what he views as his political legacy. That voice was of course his own.
“He’s at the peak of just not giving a fuck any more,” a White House official with knowledge of Trump’s thinking told the newspaper. “Bad news stories? Doesn’t give a fuck. He’s going to do what he’s going to do. He’s going to do what he promised to do on the campaign trail.”
But even some former Trump economic officials privately expressed doubts that returning the US to an era of manufacturing self-sufficiency was likely impossible.
The author Michael Wolff, who has published four books about Trump in power, says the US president will now be keenly gauging how his interruption into global trade norms is going down, with updates and live-action replays provided by aides. Trump, Wolff says, is likely caught between two opposing instincts.
“It’s great for him – he’s dominating the news once again. Nobody is talking about anything else except tariffs. Suddenly, tariffs, an arcane piece of trade policy, are the most dramatic thing in the world that he’s imbued with reality-show stuff. He’ll be really pleased with that.”
But on the other hand, Wolff predicts, Trump will be watching the financial markets. “He’ll have the business guys calling up saying: what the fuck are you doing? I’m sure he hasn’t come to any conclusion. So on the one hand it’s great – he’s the world’s leading guy again. On the other, it might collapse in on him.”
And that, he adds, is the essence of Trump. “He’s fundamentally self-destructive, but that self-destructive impulse is exactly what keeps him at the forefront of the news.”
