With his chaotic trade policy, President Donald Trump is digging himself into an economic and political hole so deep, it may prove impossible to climb out.
On Wednesday morning, just after markets spent a day reeling from Trump’s on-again-off-again threat to levy extraordinary energy, steel and aluminum tariffs on Canada and to destroy the country’s auto industry, Trump placed tariffs on all steel and aluminum imported from every country around the world, a policy that could drive up prices on a broad range of consumer and industrial goods for Americans. Europe immediately retaliated, adding pressure on a variety of American industries.
Wall Street has grown nervous about the damage Trump’s policies could inflict on America’s still-strong but increasingly wobbly economy. Stocks have plunged, with the Nasdaq falling into correction (a decline of 10% from its recent high) and the S&P 500 flirting with that inauspicious territory.
Trump has been provided with multiple escape routes and off-ramps: His advisers and economic brain trust, including Commerce Secretary Howard Lutnick, Treasury Secretary Scott Bessent and National Economic Council Director Kevin Hassett have been frequent guests on cable and network news shows, on which they called Trump’s tariff policy “fluid” and have noted good progress with foreign countries on negotiations on key disputes like fentanyl and immigration crackdowns.
At times, Trump has appeared to take the hint: He has twice tapped the brakes on Canadian and Mexican tariff plans, pushed back the apparent date in which dollar-for-dollar reciprocal tariffs would go into effect, paused the de minimis exclusion and this weekend delayed dairy and lumber tariffs that he said would go into effect by now. And on Tuesday, officials from Canada and the United States agreed to meet later this week to negotiate their trade disagreements, a potential detente in an escalating trade war.
