U.S. Markets closed

This week in Trumponomics: You okay, man?

Rick Newman
Senior Columnist

Among their many complaints, President Trump’s critics insist he’s not normal. Sour grapes, mostly.

But Trump’s commentary and behavior are becoming more erratic, in ways that matter. On the economy, Trump has now personalized his trade war with China and amplified policies that are the political equivalent of a brat’s temper-tantrum. He has also now branded the head of the Federal Reserve an “enemy,” ramping up his attacks on a central bank that refuses to politicize its policy for Trump’s political gain.

After a week of outbursts and more self-defeating tariffs, serious analysts are now questioning Trump’s lucidity. “There’s a growing sense that Trump is spinning out of control,” Greg Valliere, chief strategist for AGF Investments, wrote to clients recently. “This is not normal behavior, especially for someone who holds the nuclear codes.” Valliere, like others, has revived speculation about whether Trump can be removed under the 25th Amendment to the Constitution, which provides procedures for doing so. The outlook, for now: It would be tough.

But Trump is helping build the case. He Twitter-raged against China this week, raised tariffs yet again, and like a mad king declared, “Our great American companies are hereby ordered to immediately start looking for an alternative to China.” That single tweet drove the Dow Jones stock average down 400 points, or 1.5%.

Whether Trump is losing his grip on reality or not, his trade war is becoming a costly quagmire, while he demonstrates the strategic agility of a log. For these reasons, the Trump-o-meter registers another poor grade this week: FAILING, the second-lowest.

Source: Yahoo Finance

Trade may end up being Trump’s undoing as president. On Aug. 23, China announced it was raising tariffs on $75 billion worth of U.S. imports, a highly expected tit-for-tat response to the new tariffs Trump imposed on Chinese imports earlier in the month.

How dare they!

Later the same day, Trump raised his own tariffs on Chinese imports by five percentage points, effective September 1, October 1 and December 15 for various classes of products. “We don’t need China,” Trump sneered on Twitter. He also asked whether Fed Chair Jerome Powell is a bigger enemy than Chinese president Xi Jinping.

Tariff meltdown

It’s all loony. The Fed chair is nobody’s enemy, and Powell is more important to the stability of the U.S. economy than Trump will ever be. And Trump can’t order U.S. companies out of any given country. All he can do is, well, what he’s doing—impose tariffs, raise costs for everybody and cause chaos.

Trump’s tariff meltdown may be explained by his growing anxiety over a slowing economy that threatens his reelection odds. In the space of just two days, Trump said he was considering a new tax cut to stimulate growth, then said we don’t need a tax cut because the economy’s so strong. That’s the incoherence of a Tariff Man who thinks “trade wars … are easy to win” and can’t understand why the real economy and the stock market don’t agree with him.

This all happened in the same week Trump declared himself the “chosen one” and endorsed a claim that he is “King of Israel.” He enraged Jews everywhere by insisting they’re disloyal to Israel if they support Democrats. Oh, and he snubbed the prime minister of Denmark—ordinarily, a tight U.S. ally—because she won’t sell him Greenland. Maybe Trump will order her to do it.