As everyone knows by now, markets are experiencing extreme volatility. Over the past ten days, stocks have dropped considerably. The selling has been a global affair. Perhaps most notably, US government bonds have failed to offer their usual safe harbor. Investors have sent a clear sign of a loss of confidence.
The proximate cause was President Trump’s decision on April 2nd to impose blanket tariffs on virtually every other country on the planet. While we all knew some tariffs were in the offing, the specifics of his policy were a huge surprise. His process, methods and decisions were widely viewed as shockingly uninformed. The policy simply ignored the deep complexity and inherent interconnectedness of global trade. Once the details were fully analyzed and absorbed, it became clear President Trump’s tariffs lacked a foundation in sound economic thinking and risked a recession.
Big money players quickly voiced concerns. Piles of CEOs and investors questioned whether the Trump administration even understood what it was doing. Naturally, White House officials made the rounds in the media, defending his tariffs in ways that further strained credibility. Over time, their arguments appeared increasingly disconnected from the reality unfolding in the markets.
Thankfully, the backlash was intense. Under mounting pressure, President Trump finally reversed course and announced a 90-day pause in the tariffs. The White House called it “his plan all along.” They now claim he was just trying to bring other countries to the negotiating table. Of course, if the tariffs were just his tactic to gain leverage, pausing them at the drop of the hat and declaring victory is almost laughable. Are we really to believe that he relinquished his leverage just because an undisclosed number of countries have supposedly reached out to talk? There were many, less damaging ways to start a conversation. Thoughtful people know President Trump buckled to immense pressure and was offered an “off ramp” to save face.
Now, the timeline of his announcement of his tariff “pause” raises some serious questions. Media sources reported last Monday morning that such a pause was in the works. Stocks vaulted within minutes. The White House quickly declared those reports to be “fake news.” Promptly, stocks resumed their slide. Then, only two days later on Wednesday morning – hours before making his public announcement – President Trump posted on social media that it was “a great time to buy.” He later admitted his decision to pause tariffs was made that very morning. Piecing this timeline together, it’s quite clear that President Trump publicly encouraged people to buy stocks – and, it is important to remember for every buyer, there is a seller – while he sat on market-moving information that he alone controlled. This is a disturbing breach of the public’s trust.
Sadly, this entire episode – and continued escalations with China – is yet another stark reminder of the need for Congress to reassert its constitutional authority. If our lawmakers don’t step up and do their jobs – soon – they share responsibility for what happens next. Have they not yet seen enough?