Editorial: Trump’s USA business is faltering

To those who voted for President Donald Trump because he was a "good businessman" and knows how to handle the economy, we submit recent events as a case study to the contrary.

A good businessperson knows how to judge risk, what impact changes in prices might have on consumers and how one's competitors might react. In the case of the U.S. economy as a business, there's much more at risk.

Trump's judgment and conclusions thus far have sent the stock market spiraling down with news of tariffs and retaliatory tariffs from trading partners, caused the Federal Reserve to forgo lowering interest rates anytime soon, and depleted consumer confidence to its lowest level in 12 years.

Estimates for growth in GDP have been lowered from about 2.6% annual growth last year to the Atlanta Federal Reserve's estimate -2.8% this year. The Conference Board now reports the consumer confidence index fell for the fourth time in March, reaching a 12-year low. Fed Chairman Jerome Powell said the Fed would not be moving off its benchmark 4.3% interest rate as tariffs threaten to boost inflation, the key factor for interest rates.

The stock market closed the week with a big sell-off Thursday and Friday, and the S&P 500 index is now down 8% for the year's first three months.

Trump and his disciples believe tariffs will be good in the long term, but the stock market is disagreeing. In interviews, Trump said he doesn't care if foreign cars get more expensive and then people will buy American cars.

This is wishful thinking and many American cars have parts made in Canada and Mexico, so even car repairs will be more costly for those who won't be buying new cars, whose price will go up by an estimated $4,000.

Trump has admitted things might be tougher for consumers and prices might rise, boldly breaking a campaign promise to keep prices down. Tariffs will increases costs by $4,000 to $6,000 per family, according to experts.

Farmers will be hurt. Tariffs on China result in China ending its purchasing of American farm products and, like it did during the first term of Trump tariffs, went to other buyers. Those export markets, which make up 60% of the income of local pork producers, aren't coming back.

Even oil prices have fallen to their lowest since 2001.

When consumers pull back — and there's plenty evidence to show they are — businesses pull back, jobs go away, and the economy goes into a recession.

And Trump's assumptions about his competitors show a severe miscalculation. China reacted with a retaliatory tariff of 34% on all American goods. Others are preparing to do the same. While initial "negotiating" on tariffs may have worked in Trump's first-round threats, it seems our trading partners are not keen on dealing with the boy who cried wolf.

And Trump seems to have strange ideas of how quickly U.S. auto makers can build another U.S. factory. That will take some time, but many business are holding back on taking any new building risk in this uncertain economy Trump is creating. Farmers aren't buying and building new grain bins because they don't know if the farm economy will withstand this game of chicken on tariffs.

Overall business investment was down 9% in the fourth quarter of 2024.

It appears Trump and his followers will have to hang their hats on some kind of tariff magic, hoping tariffs will cause some positive economic outcome that hasn't happened in recent history. The world is a different place from when tariffs were popular in the 1920s and 1930s.

An expert on world trade says Trump and his team set the tariff rates without the use of "standard economics." They made simple calculations based on trade deficits with each country.

Prices of U.S. goods have already begun their ascent.

So as the negative economic data piles up on Trump's business strategy, we would have those who voted for him because he's a good "businessman" reconsider that assessment.

Mankato Free Press