Is there anybody left who likes President Trump’s new economic nihilism?
There must be a few folks. Domestic steel and aluminum producers will see increased profits from Trump’s import tariffs, while everybody else pays more. The Wall Street Journal found a handful of Trump voters who don’t seem to mind the hits their retirement plans have taken under Trump. Trade lawyers must be happy now that their phones are ringing off the hook.
Among most others, however, surprise is turning to shock and even dismay. Trump’s tariff strategy is turning out to be far more disruptive and damaging than almost anybody guessed when Trump took office just two months ago.
“Comments from President Donald Trump and his cabinet members in the past week suggest that neither an economic downturn nor a severe stock market decline will deter the administration from pursuing its America First policy agenda,” forecasting firm Capital Economics explained in a March 14 analysis. “This raises the prospect that our policy assumptions are too timid and presents downside risks to our forecasts.”
This kind of adjustment is happening all across the economy. Goldman Sachs, Morgan Stanley, and many others are cutting their 2025 estimates for economic growth and raising their estimates for inflation. Equity analysts are downgrading profit estimates and stock-price forecasts for dozens of big firms likely to suffer from Trump’s tariffs.
Companies may only be starting to acknowledge the damage Trump will cause their bottom lines. “We feel that tariff impacts are not well reflected in [earnings] guidance,” Citi analysts warned on March 14. “We may see a wave of negative pre-announcements over the next three weeks.”
The S&P 500 index hit correction territory on March 13, down 10.1% from its peak on Feb. 19. Wall Streeters have been circulating charts showing the fastest S&P contractions of the last 75 years. The Trump 2025 slide is the fifth fastest. But if you narrow the list to the fastest stock-market declines caused solely by a misinformed president executing bad policy, Trump would be No. 1.
The stock market isn’t the real economy, so maybe the ordinary Joes and Josies who helped Trump win his second term last year are feeling better than the investor class? Sorry, no. The latest University of Michigan consumer survey found that sentiment hit the lowest level since November 2022, when the Biden economy was near peak inflation shock. It’s the third monthly decline in a row. Plunging confidence clearly coincides with Trump’s arrival in the White House.
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Republicans have felt unusually buoyant since Trump won last year’s presidential election, but their confidence is now declining in the Michigan survey. Independents are considerably more gloomy than just a few months ago, and Democrats are downright despondent.
Trump and his economic team have adopted a no-pain, no-gain storyline, saying that some correctives are necessary now to deliver stronger growth later. But future expectations are getting worse, not better. Respondents to the Michigan survey expect inflation, now just 2.8%, to soar to 4.9% a year from now. That’s the worst inflation outlook since 1991. Trump’s tariffs make imports and many domestic products more expensive, and consumers logically expect that they’ll end up bearing the cost.
Read more: What Trump’s tariffs mean for the economy and your wallet
Trump may need a new storyline because Americans aren’t buying the idea that tariffs will yield some magical benefits down the road. “Message to Washington: Short-term pain for long-term pain,” is how economist David Rosenberg of Rosenberg Research summarized the latest Michigan survey.
President Donald Trump speaks to reporters during a meeting with NATO Secretary General Mark Rutte at the White House in Washington, Thursday, March 13, 2025. (Pool via AP) ·ASSOCIATED PRESS
It’s a new experience for Americans to watch an incoming president deliberately sabotage the economy during his first few weeks in office. It’s a new experience for Trump too. He won the presidential election last year largely because voters thought he’d do a better job getting inflation down and boosting prosperity than any Democrat tied to President Joe Biden’s record. Trump reveled in that reputation, repeatedly reminding voters that inflation was far lower during his first presidency than it was under Biden.
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Voters are now undergoing a reeducation, same as investors who thought Trump would be good for stocks. When Trump came into office, his approval rating on the economy was generally above 50%. In a recent Quinnipiac poll, that fell to 41%. And that survey occurred before the March 13 stock market correction dominated financial headlines, so Trump’s standing on the economy could degrade further.
There was a modest rebound from the stock-market correction on March 14, but that have may reflected the mere absence of bad news for a single trading cycle. Economist Ed Yardeni called it a “scared cat bounce” and said, “Any day without a Trump tariff comment is a good day for the market.”
The biggest miscalculation for investors may have been the bet that Trump would cave if tariffs or other misguided actions caused too much damage to markets and the economy. They may also have underestimated the pain threshold Trump is willing to thrust on his fellow Americans.
But it’s still hard to understand why Trump is doing all this. It’s possible he truly believes, against all mainstream advice, that tariffs will produce some future boom by keeping imports out and boosting the 10% of the US economy that manufacturing accounts for. But a de facto outcome of that scenario would be higher prices across the board for anything that once entered the US market as an import. Higher prices pinch spending, squelch growth, and annoy voters, as Biden’s entire presidency attests to.
It’s possible Trump wants a more protected 1970-style economy regardless of the consequences. It’s possible the “beautiful word” tariff is the Rosebud of Trump’s consciousness — a singular, atavistic desire that dominates all others. It’s possible a worm penetrated Trump’s brain and inadvertently activated the usually dormant tariff lobe. Theories abound.
But the why doesn’t really matter. Americans who thought they’d benefit from Trump’s shrewd instincts on the economy are now discovering that they’re captive to economic delusions as well. Trump has now committed to an escalating series of trade wars that may eventually be impossible for a proud and touchy ruler to unwind. The biggest surprise may be Trump discovering that his popularity doesn’t matter.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman.
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