It’s been another exciting day for investors.
The S&P 500 fell 6 percent by the end of trading on Friday, pulling the benchmark U.S. index closer to a bear market, Wall Street’s term for a decline of more than 20 percent from its latest peak in mid-February. The tech-heavy Nasdaq Composite index fell 5.8 percent, pushing it into a bear market.
The U.S. rout followed falls in global markets, and worries about an escalating global trade war overshadowed a positive reading about the health of the U.S. labor market.
The problem with jobs reports is that they’re a lagging indicator. They’re a snapshot of the recent past, which may or may not show us anything about the future.
Meanwhile, the White House can’t seem to get its story straight about exactly what it’s doing. Today various spokespeople sternly told the press that the tariffs were not open to negotiation. Later in the day Trump said they were. In fact, he has decided that was the goal all along.
White House officials also circulated internal talking points telling surrogates that the tariffs should not be characterized as a starting point for negotiations, according to three people with knowledge of the matter who spoke on the condition of anonymity to describe internal matters.
But after markets closed down sharply, Trump told reporters on Air Force One that he would be open to striking deals with individual countries.
Here’s the new story:
“Every country is calling us. That’s the beauty of what we do,” Trump said. “We put ourselves in the driver’s seat. If we would have asked these countries to do us a favor, they would have said no. Now they will do anything for us.”
He says he’s waiting for all these countries to offer him something “phenomenal.” Whatever that is. What’s probably really happening here is that the reaction to the tariff announcement was much worse than Trump had anticipated. Now he’s letting it be known that countries had better call him to make him an offer. If they wait too long, they’ll lose out. Even now, no doubt, Trump is waiting by the phone. In the meantime, any country or multinational corporation with any sense is figuring out how to reorganize trade and business around the United States. Not with it. It isn’t just the tariffs; it’s the uncertainty. Trump might withdraw all this in a couple of days. Or not.
Rolling Stone reports that Trump shared a video claiming he is tanking the stock market on purpose.
On Friday morning, the president shared a link on Truth Social to what appears to be a partially AI-generated video claiming that he was “Purposely CRASHING The Market.”
The one-minute video — originally shared March 15 on TikTok — predates the president’s tariff announcement on Wednesday. It claims that “Trump is crashing the stock market by 20 percent this month, but he’s doing it on purpose. […] Here’s the secret game he’s playing, and it could make you rich.”
The video proposes that Trump is attempting to “push cash into treasuries, which forces the Fed to slash interest rates in May, and those lower rates give the Fed the ability to refinance trillions of debt very inexpensively. It also weakens the dollar and drops mortgage rates. Now it’s a wild chess move, but it’s working.”
“What about his tariffs? I’ll tell you, it’s a genius play,” the video adds. “It actually forces companies to build here to dodge them. It also forces farmers to sell more of their products here in the U.S., to bring grocery prices way down. We’ve already seen this with eggs. Now, remember, 94 percent of all stocks are owned only by 8 percent of Americans. So Trump, he’s taking from the rich short term and handing it to the middle class through lower prices.”
Sound dodgy and completely made up? Don’t stress, the video makes sure to point out that super rich guy Warren Buffet “just said [that] Trump is making the best economic moves he’s seen in over 50 years.” Only Warren Buffet never said that. He actually called Trump’s proposed tariff regime an “act of war.”
That may not have been exactly what Trump was thinking, assuming he even thinks, but he must have decided it sounded like a plan.
At a basic level, the entire MAGA movement, and Donald Trump from whom all of it stems, simply doesn’t grasp the nature of American power or its limitations. In their view, the United States is the natural and inherent dominating power in the world. We’re the most powerful and the strongest. And starting from that view they look out onto the world and think if we are in charge why don’t we act like we’re in charge?
Instead of acting like we’re in charge, we do a lot of consulting and asking. That’s weak and leads everyone to take advantage of us, protecting their industries while we keep our markets open, letting their defenses atrophy and relying on our protection, etc. It’s lost on them that the U.S. is not actually the inherently dominating power on the planet. U.S. primacy is based yes on a vast military, access to the American domestic market, American wealth. But really it’s based on America’s role as the custodian of a global system that on balance works quite well, at least for the other advanced economies of the world. It provides a general peace, a system of more or less known rules enforced with some consistency, a U.S. primacy that keeps the peace without dominating other middle powers, etc. The U.S. global order is like a trampoline with a bowling ball in the middle; like a giant star, the very fabric of the system is subtly angled in the U.S. direction. But on balance it works. The U.S. is the first among equals more than a dominating power.
In other words, precisely what MAGA views as examples of weakness are the bases of American power. Donald Trump wants to hold the rest of the world in subjection. But the U.S. simply isn’t powerful enough to do that. It may have been just after World War II for a while. But it certainly isn’t now. That’s also why the American primacy has so long outlasted the Soviet one, whose satellites tore away from it at the first opportunity, and even before any real opportunity: because the U.S. primacy actually worked quite well for allies in Europe and East Asia. Donald Trump is only able to look at America’s persistent trade deficits. The role of the dollar as the global reserve currency and the massive advantages it brings are lost on him and that’s what makes the trade deficits in some ways inevitable and also sustainable. It also gives the U.S. a whole series of other vast advantages, one of which is being able to borrow and borrow and have it mostly not matter.
And in the name of making America “great again,” Trump and his culties are destroying everything that made it great. And I don’t believe there will be any going back. It will be a long time before the U.S. is trusted again, I fear, never mind seen as a “leader” of any sort. Please do read the entire essay. Josh Marshall goes on to the de-industrialization of the United States that was pushed by “Reagan, Thatcher and the G7 powers” created a real problem for the U.S. How do we re-industrialize? This appears to be what Trump wants to do, but the way he’s going about it isn’t going to work.
And, of course, Congress could put a stop to all this right now. It won’t, of course. But give it a few weeks. I don’t think it’s completely impossible that some Republicans will break down under pressure from donors and constituents and move to rein in Trump.