White House stumbles over the economic stupidity of its own policies
(Originally published April 1 in “What in the World“) The stock market continues to ring the alarm bell over Trump’s policy of econocide.
The S&P500 ended the first quarter of 2025 down 4.6%, while the Nasdaq has fallen 10.5%. That’s the worst quarterly decline for both indexes since 2022. The S&P500 has lost 6.4% since Trump’s inauguration; the Nasdaq 11.9%.
As Trump and his advisers scramble to finalize the specifics of Wednesday’s plan to impose reciprocal tariffs, advisers are reportedly still debating whether to apply reciprocal tariffs to match each specific trading partners’ own tariffs on U.S. products, or instead apply the kind of sweeping, flat tariff on all imports Trump campaigned on. They’re also grappling with the contradiction inherent in Trump’s tariff promises: if tariffs achieve Trump’s goal of forcing down trade barriers to U.S. exports, they won’t achieve Trump’s aim to raise government revenue to reduce the budget deficit and U.S. debt, nor last long enough to achieve Trump’s goal of forcing manufacturers to relocate production in the U.S.
Indeed, Trump is already considering rebating some of that tariff revenue as aid to U.S. farmers, who will lose export revenue when trading partners retaliate, as China already has, against his tariffs. That’s what he did in his last term, offsetting the revenue tariffs were supposed to have generated.
Economists responded:
Trump’s tariffs threaten to raise prices and strangle supply chains, sparking retaliatory tariffs that hit U.S. exports and kill the high-end jobs they create. His government layoffs are further boosting the ranks of jobless, and his deportations are starving low-end industries of manual labor. Economists warn that his de-funding of scientific research also threatens to reduce long-term U.S. competitiveness, innovation, and productivity. How? By reducing the kind of technological breakthroughs that government incentives have made possible in the past: every dollar invested in research and development ostensibly produces about $5 in new GDP. Zero dollars of R&D yields nada. Trump is willy-nilly working to reverse a century of U.S. economic development.
Damn the torpedoes: Trump’s worm-eaten Secretary of Health and Human Services, Robert F. Kennedy Jr., has announced a sweeping decimation of his fief that will eliminate 20,000 of its 82,000 employees and possibly reduce vital health services to American citizens.