Follow the latest news on the Trump administration.
Since taking office, President Trump and his advisers have explained the president’s aggressive economic approach to tariffs with a litany of conflicting ideas. Other countries are “ripping off” America and need to be stopped. The United States is fighting a drug war with Canada, Mexico and China. Tariffs will help pay down the nation’s $36 trillion debt load.
The messaging hodgepodge comes as the U.S. economy shows signs of strain in response to Mr. Trump’s steep tariffs on Canada, Mexico and China and as he prepares to enact “reciprocal” tariffs on imports from around the world on April 2.
The tariffs have sowed uncertainty and dampened business investment and consumer sentiment while sending markets gyrating daily. They are also likely to prevent the Federal Reserve from cutting rates as policymakers wait to see exactly what measures Mr. Trump follows through with and how they affect the economy.
But rather than trying to provide more coherence about their economic strategy, Mr. Trump and his advisers seem to be embracing the uncertainty of his approach as a feature, not a bug.
“Absolutely, between now and April 2, there’ll be some uncertainty,” Kevin Hassett, the director of the White House’s National Economic Council, said on CNBC this week amid questions about what investors are to make of Mr. Trump’s trade agenda.
Mr. Trump, when asked whether he would give the business community more clarity about his overall approach, largely dismissed concerns that corporations needed predictability.
“No, I think that they say that,” he told Maria Bartiromo, the host of “Sunday Morning Futures” on Fox News, this month. “You know, it sounds good to say. But, for years, the globalists, the big globalists have been ripping off the United States. They have been taking money away from the United States. And all we’re doing is getting some of it back. And we’re going to treat our country fairly.”
Mr. Trump has also refused to rule out a recession, an outcome that economists and analysts warn could become more likely amid such uncertainty.
The ratings firm Fitch warned this week that the global trade war Mr. Trump has started will reduce global growth and slow U.S. output while increasing prices and delaying the Federal Reserve’s interest rate cuts.
“Tariff hikes will result in higher U.S. consumer prices, reduce real wages and increase companies’ costs, and the surge in policy uncertainty will take a toll on business investment,” said Brian Coulton, Fitch’s chief economist.
The surge of uncertainty can largely be attributed to the fact that Mr. Trump views tariffs as a negotiating tool for solving policy issues of all varieties rather than an instrument for fixing trade distortions. As part of that approach, he aims to remain unpredictable to maximize his negotiating leverage.
“It does not help that the Trump 2.0 rollout to date has lacked strategic coherence and effective orchestration,” Navin Girishankar, the president of the economic security and technology department at the Center for Strategic and International Studies, wrote in an analysis this week. “The resulting policy volatility is already flowing through to financial markets and, by some accounts, to the real economy and communities around the country.”
Henrietta Treyz, the director of economic policy at the investment firm Veda Partners, said that lawmakers remained hopeful that the tariffs were a saber-rattling negotiating tactic and that markets would calm down when there was finally “certainty” about them. Investors, however, remain skittish.
“There is an emerging view on Capitol Hill that once we get past April 1, there will be certainty, and markets will calm down,” Ms. Treyz said. “That view is not shared by most investors who think the uncertainty is the near-term volatility driver but take the economic ramifications equally if not more seriously.”
While Mr. Trump has demonstrated a willingness to delay or water down tariffs as part of his negotiating strategy, it is not clear that market reaction has influenced his decisions in his second term. And in a contrast to his first term, Mr. Trump’s top economic aides do not appear to be overly inclined to moderate his instincts.
“These policies are the most important thing America has ever had,” Howard Lutnick, the commerce secretary, told CBS News when asked this month if Mr. Trump’s tariffs were worth it even if they tipped the U.S. economy into a recession. “It is worth it.”
Treasury Secretary Scott Bessent, who declined this week to rule out the possibility of a recession, suggested in an interview on Tuesday that he was optimistic that some of the looming tariffs could be scaled back if other countries lowered their trade barriers. He did not, however, shy away from the idea that protectionism is good policy.
“President Trump has identified several critical industries, critical industries that we let get away from us,” Mr. Bessent said on the Fox Business Network. “He wants to bring back manufacturing to the United States, and we are putting these tariffs on.”
The continuous drama does appear to be taking a toll on the U.S. economy, stalling corporate deal activity and slowing some types of business investment.
Lawrence H. Summers, who served as Treasury secretary under President Bill Clinton, said that even if Mr. Trump ended up scaling back his tariffs, they were already doing damage.
“These are profoundly problematic steps even if reversed,” Mr. Summers said. “They generate immense uncertainty which overhangs the economy.”
