Donald Trump woke up this morning and demanded, through social media posts, that Apple move all manufacturing to the US or face a 25% tariff and recommended 50% tariffs on the EU. It isn’t clear who he recommended this to, since he has been randomly applying tariffs whenever he feels like it.
Stock markets still hadn’t recovered and took another dive after the announcement. But that may be the least troubling sign for America’s economy. Here are others:
The stock markets get most of the attention because the bond market is not something most Americans are familiar with and is typically quiet, calm, and slow-moving. This past Wednesday's 20-year treasury bond auction was a disaster, with unusually low demand driving yields excessively high.
This came on the heels of Republicans signalling they would pass the “big beautiful bill,” which would explode the US debt and hurt the overall economy. The House passed that bill on Thursday morning.
Moody’s also downgraded America’s credit rating for the first time in history, citing the country’s climbing debt and Republicans' unwillingness to address it.
Trump has increased economic uncertainty by continuing to change his position on tariffs, as he did again today. He attacked Walmart for announcing price increases due to tariffs and shamed Amazon for considering showing what part of the price at checkout was from tariffs. Trump seems to think every company and foreign country would “eat the tariffs” because he told them to. He is frustrated that everything about his tariff plan has failed, causing him to lash out and make the situation worse instead of admitting it was a mistake and backing off.
Numerous companies have announced incoming price increases, canceled their economic outlooks due to the inability to predict where the economy will go, and have announced layoffs.
All of this uncertainty and looming higher prices have caused consumer sentiment to drop to the lows seen during the height of the Covid pandemic, which was a bad time for the US economy.
The housing market is slowing down, and there is concern about a bubble. So far, experts do not believe a crash is imminent. But a worsening economy, including a recession, could increase those chances.
GDP shrank last quarter. The chances of a recession ranged from 30% to 60%, depending on the organization making the prediction, but this was before today’s tariff threats. Continuing economic uncertainty and high tariffs increase the likelihood of a recession.
Job growth last quarter was the worst since the beginning of the pandemic. Jobless claims are up, and unemployment has increased slightly. Many government job cuts are still not accounted for because people are being paid not to work as the administration challenges the court orders that demanded workers be reinstated.
Any of these factors would be concerning, but all of them together should worry people. As uncertainty continues and prices rise, consumers will pull back from spending, worsening the US economy and increasing the chances of a recession.
The most impressive aspect of this is how a single individual caused it. Trump alone brought the US economy to a halt, sank markets, hurt trade, and increased prices. If Republicans in Congress had enforced their legal control over implementing tariffs, America would be in a better place. This is why our founding fathers limited the president's power and created three branches of government to keep each other in check. Breaking the system of government is breaking the nation.
The one positive is that a terrible economic outcome is not guaranteed. However, to prevent it, Congress must rein in Trump and establish certainty about how the government will approach the economy for the next few years. Anything less, and our troubles will worsen.
Tariffs: The Good, The Bad, and the Ugly
Donald Trump campaigned on heavily using tariffs as a cornerstone of his economic and foreign relations plans. He recently announced that his goal would be to enact 25% tariffs on Canada and Mexico, along with an additional increase of 10% for tariffs on China.
I agree with everything but it won't get better. The hardliners slowed the bill in the House but caved in quickly. The people who voted for Trump's unqualified cabinet will meekly (or complicity) follow. Recession doesn't matter as long as the oligarchs have money. The coup is nearing completion. Congress will do nothing. The Courts are barely holding.