Donald Trump is whistling in the dark. His Liberation Day tariffs have wiped more than $6.5 trillion from US stocks and reignited concerns America will be plunged into recession.
Yet the US President is painting an optimistic vision of a brighter economic future.
Trump is trapped. In political terms, he has no other choice than to double down on what he is calling an “economic revolution”.
But every sign is that his tariff policy will not work and instead inflict grave damage on the US economy and the world.
Even he is now urging Americans to “hang tough” while openly conceding this period of economic readjustment “won’t be easy”.
Trump needs to bring Americans with him, so his message is that short-term pain will lead to long-term gain through the revival of US industries and jobs.
Speaking on Air Force One on Sunday, Trump dismissed the market chaos.
“What’s going to happen with the market, I can’t tell you,” the President said.
“But I can tell you, our country has gotten a lot stronger. And eventually it’ll be a country like no other. It will be the most dominant country economically in the world.”
Promises will not serve as a viable long-term strategy.
Trump’s most pressing political problem is there is a time limit on this narrative.
Now the market has slumped and the trade war threatens a global recession, more and more people will end up questioning whether the treatment is worse than the disease.
This is deadly for Trump because he has built his success on convincing Americans the international trading system and broader Western alliance network have been rigged against them.
Trump knows that to successfully unmoor America from the post-World War II international system he must offer a better compact moving forward. But the market carnage has ignited the first glimmer that Americans have been offered a raw deal.
This is why Trump has doubled down on his attack against the status quo following his Liberation Day tariffs.
“Sometimes you have to take medicine to fix something,” Trump said on Sunday.
“We have been treated so badly by other countries.
“They took our businesses. They took our money. They took our jobs. They moved it to Mexico. They moved it to Canada. They moved a lot of it to China. And it’s not sustainable. We’re not going to do it.”
Trump’s senior counsellor for trade and manufacturing, Peter Navarro, advised Americans not to sell off their shares on Sunday morning and promised there would be a major market recovery.
Navarro declared the smart strategy was to “stay in because we are going to have the biggest boom in the stock market we’ve ever seen under the Trump policies”.
“We will find a bottom in this market quickly. We will hit 50,000 on the Dow easily by the end of this term,” he said.
Navarro talks the biggest game because he has the most to lose if the tariffs don’t work. But big promises – particularly those that require sacrifices from the public – come with big political risks.
Americans are being plunged into the dark, but eventually they will need to see a light at the end of the tunnel.
At the moment, it’s nowhere to be seen.
The larger risk for America – if the Trumpian experiment fails – is that it may be too late for the US to achieve a simple “snap back”.
The dismantling of the post-war order has begun and may prove too difficult to be fully restored.
In Trump 2.0, ‘free trade’ republicans are a dying breed
As Republicans bends to the president’s populist vision, laissez-faire is out of style.
US economy shows remarkable resilience in face of trade turmoil
Donald Trump’s policies have created headwinds, but the US economy is pushing through them.