Donald Trump’s Ego Melts the Global Economy

By the standards of world-historical events, much of Donald Trump’s Wednesday afternoon speech in the Rose Garden was remarkably forgettable. Trump opened the affair, which he had billed as America’s “Liberation Day,” with a rant about the dire state of the nation that could have been cribbed directly from Steve Bannon’s first draft of Trump’s 2017 “American Carnage” Inaugural Address: cities and towns “raped” and “pillaged”; factories “ransacked”; a country “ripped off.” The apocalyptic bluster, like the loud red tie and the strange riffs about Canadian milk and radical-left lunatic judges, was familiar stuff—we’ve heard this so many times before.

But, by the time Trump finished, something else was clear, too—we’ve never actually seen anything like it. About halfway through his speech, he called Howard Lutnick, his billionaire golf buddy turned Commerce Secretary, up to the podium with the big reveal: a chart with a list of countries and the previously secret amounts of sweeping retaliatory tariffs that Trump planned to impose on them. As the world squinted to find out its fate, Trump read the numbers off like a MAGA auctioneer. The global trade war that he’d long threatened and somehow never actually triggered finally seemed to be happening. “We’re going to have to go through a little tough love, maybe,” he said.

Tough love, indeed. Even as Trump spoke, the initial verdict from financial markets around the world came in—a global meltdown. The tariffs were worse than expected. Stock-market futures plunged. The dollar dropped against other currencies. By the close of the markets on Thursday, the damage was all too evident: U.S. stocks had recorded their biggest drop since the earliest days of the COVID pandemic, losing close to three trillion dollars in value. Companies started preëmptively laying off workers. “Never before has an hour of Presidential rhetoric cost so many people so much,” Larry Summers wrote on X. Once again, the Wall Street boys, despite Trump’s many warnings, had failed to take him seriously. “Far more onerous than the market was expecting,” one hedge-fund manager told Politico. “Shockingly high,” another told the Times. “It’s a disaster.” Etc., etc. You get the point.

Amid the chaos of eviscerated retirement savings, blown-up supply chains, and pissed-off allies, perhaps it’s a mistake to linger on just how wrong America’s business establishment continues to be about Trump. But, wow, has this been a case of near-catastrophic wishful thinking. And I think it speaks to much of what we are still not understanding about the ways in which Trump’s second term is off to a darker, more dangerous start than his first. “What’s striking to me is not just that Wall Street so badly underestimated downside risk—it’s that they piled all-in on post-election euphoria that assumed, contrary to all reporting, the tariffs wouldn’t happen,” Jeff Stein, the Washington Post’s economics reporter, wrote Thursday morning on X.

But, of course, the real mistake has little to do with global trade policy, and much to do with a failed theory of the case about Trump. There is no rational analysis that would lead one to the conclusion that a President would single-handedly decide to blow up a century’s worth of globalization on a chilly Wednesday afternoon in April. I thought a response to Stein from Garry Kasparov, the international chess champion turned modern-day Russian dissident, was particularly revealing. Kasparov attributed the failure to anticipate Trump’s trade war to an epic level of denial about the President’s Vladimir Putin-like brand of autocratic personality disorder—after all, Putin’s unprovoked invasion of Ukraine did not make much sense, either, to many of those presented with irrefutable evidence that he was planning it. Instead, Kasparov suggested a maxim for our unhappy times: “Dictators always lie about what they’ve done, but are often quite plain about what they want to do.”

And yet the simplest truths about Trump have proved surprisingly elusive. Why else would so many people who have so much riding on the outcome convince themselves that Trump did not mean what he’s been publicly threatening to do since his first campaign nine years ago? The record has long suggested that, though Trump has few fixed ideological principles, an almost mystical belief in the powers of the tariff is one of them. He explicitly promised to roll out reciprocal tariffs in a campaign video on June 21, 2023, vowing, “An eye for an eye, a tariff for a tariff.” In an appearance before hundreds of business executives in Chicago a few weeks before the 2024 election, he said, “To me, the most beautiful word in the dictionary is ‘tariff.’ ” At Wednesday’s Rose Garden event, Trump spoke of the national debt disappearing, of jobs and factories “roaring back.” (Prices would fall, too, he promised—“ultimately.”)

In this new political moment of the unthinkable made manifest, the sheer power rush for Trump should also not be underestimated. Imagine his joy as he sat down to sign an executive order decreeing the new tariffs on the basis of sweeping powers he may or may not legally possess to declare a “national economic emergency”—here was Trump transforming the world with a single flourish of his Sharpie pen. “It’s such an honor to be finally able to do this,” he said. At what other moment in modern times has a single man wielded so much unaccountable power over such a large swath of the world economy? There are whole businesses devoted to risk analysis for corporations; this is a situation in which Trump himself is the risk and the crisis being analyzed is one that he created. Talk about an ego trip.

Beyond a misunderstanding of Trump’s psychology, there are a few other telling conclusions to be drawn from all this. One is about the maximalist approach the President has taken to his second term. Trump 1.0 fulminated about government waste, the evils of the “deep state,” and the need to take legally questionable actions against illegal immigration; Trump 2.0 has shown a striking willingness to act on his most disruptive ideas. This seems to have surprised many who assessed his rhetoric as just more hype likely to fall prey to the same institutional constraints and poor execution that hampered Trump in his first term. By such logic, the fact that Trump had not succeeded in gutting federal agencies or blowing up the global economic order at the end of his first four years in office was proof that he would not do so this time, either. Oops.

The difference is not so much Trump—it’s who surrounds him now compared with eight years ago. Yesterday’s yes-men, it turns out, weren’t quite so compliant as today’s. (Mnuchin nostalgia? It’s a thing.) A scene from Trump’s first term sums up the contrast: On April 26, 2017, Bannon, who was then still one of Trump’s closest White House advisers, had walked into the Oval Office hoping to get the President to sign a draft executive order for the U.S. to withdraw from NAFTA; the plan was for Trump to announce the end of America’s free-trade deal with Canada and Mexico at a prime-time rally as the marquee event of his first hundred days in office. Trump himself had long railed against NAFTA. But many of his other aides were dead set against abruptly blowing up relations with America’s two closest neighbors for the sake of an applause line at a political rally. Learning of Bannon’s ploy, Trump’s then chief of staff, Reince Priebus, urgently summoned Cabinet officials who supported NAFTA, including Trump’s first Secretary of State, Rex Tillerson, and Commerce Secretary, Wilbur Ross, to the White House to stop it. Trump reluctantly agreed to wait, though he told the Washington Post ruefully the next day: “I was all set to terminate.”

Long afterward, Priebus would take credit for having “orchestrated” the successful pushback. But he understood what it has taken eight years for many others to figure out—Trump truly was prepared to do it. This time, it only took seventy-four days to smash the global economic order. Trump is liberated, even if the rest of us are not. In his second-term White House, they are all Steve Bannons now. ♦