President Donald Trump appears to be walking back some of his more extreme positioning on the economy — pivoting yet again on his signature tariff agenda and renewing concerns that his haphazard approach has already done serious economic damage. On Tuesday, Trump softened on two key issues that had been giving Wall Street nightmares: He signaled openness to easing tariffs on China, and said he has “no intention” of firing Federal Reserve Chair Jerome Powell. But the abrupt shift in tone was yet another reminder of the turbulence emanating from the White House that could push the US, and potentially other economies, into a recession. More damaging than the tariffs themselves is the uncertainty the White House has created, said Wendy Edelberg, senior fellow in Economic Studies at the Brookings Institution, in an interview with CNN. “And the lurching hasn’t ended. In fact, this is simply another lurch.” After an abysmal few weeks, US stocks surged Tuesday and Wednesday — a sign of Wall Street’s relief that the president appears to be heeding warnings from CEOs and close advisers who say his 145% tariffs on China aren’t sustainable. In an Oval Office gaggle with reporters Tuesday, Trump also refrained from attacking Powell. (It was a rare moment of restraint with regard to Powell, whom Trump has recently called a “major loser.” By Wednesday evening, Trump had resumed a more threatening tone, saying he “might call him.”) But US stocks remain down 11% since Trump took office in January, battered by near-constant changes and mixed messaging from the White House about a tariff agenda that would fundamentally alter global trade and slam the brakes on economic growth. Despite the recent rebound, nearly $7 trillion in value has been erased from the S&P 500 since record highs were set just two months ago, according to S&P Dow Jones Indices. At this point, any sign that Trump is pulling back on tariffs or respecting decades of precedent protecting the Fed’s independence will land, at least temporarily, as a win for Wall Street. “Markets are terrified about the dumb things he’s going to do, and when he doesn’t do them, they’re thrilled,” Justin Wolfers, professor of economics and public policy at the University of Michigan, told CNN. But Wolfers and other economists expressed concern about the damage that’s already been done. “It’s clear the economy will slow,” he said. “The question is how much.” Forecasters broadly say there is an elevated risk of a recession this year — perhaps as high as a 50% to 70% chance. Virtually all note those odds are in flux because of Trump’s ever-shifting tariff agenda. Even if all of the Trump 2.0 tariffs were unwound today, the US would still lose at least 1% of GDP just from the policy uncertainty, said Kent Smetters, professor of business economics and public policy at the University of Pennsylvania’s Wharton School. “We are projecting that GDP will eventually fall by 5% if all the tariffs are implemented.” But to be clear: The Trump administration has not had any public discussion about unwinding other tariffs, which alone are extraordinarily aggressive. Tariffs on China may come down, but “they won’t be zero,” according to Trump. Remaining in place are 10% universal tariffs and 25% tariffs on autos, steel, aluminum and some Mexican and Canadian products. According to a senior White House official who spoke to the Wall Street Journal, the current 145% tariffs on China could come down to “between roughly 50% and 65%.” That would still be hugely disruptive. Trump’s tariff headaches come with more than financial costs. Business leaders have been paralyzed by lack of clarity, as have some of America’s closest allies and trading partners around the globe. “The US administration’s on-off tariff policy has led to a confidence crisis,” Gregory Daco, EY’s chief economist, said in a report on Wednesday. It will take time to restore that lost confidence, especially given that US tariffs can be dialed up or down at any hour and often with little to no notice. “Businesses don’t know which end is up,” Edelberg said, noting one Fed study that found 75% of businesses said they aren’t increasing their capital expenditures over the next six months. “Everyone is holding their breath because they don’t know what policy is going to be the law of the land tomorrow.” That anxiety was evident in the Fed’s “beige book” report, a periodic survey of businesses across the country, released Wednesday. Across industries, firms said they are pausing or slowing hiring while they wait for clarity. Meanwhile, America’s brand has taken a hit — both at home and abroad. Even some of the US’s closest allies and trading partners are struggling to see the logic behind Trump’s trade war. “The US-Canada trading relationship is profoundly damaged, and will be forever,” Wolfers said. “It’s made it politically impossible for Canada to be pro-America … That damage is done.”
Trump chaos has already damaged the economy. It may be too late to fix it
TruthLens AI Suggested Headline:
"Trump's Economic Policy Uncertainty Raises Recession Concerns"
CNN
5.8
TruthLens AI Summary
President Donald Trump has recently indicated a potential shift in his economic strategy, particularly concerning his controversial tariff policies. On a recent occasion, he suggested a willingness to ease tariffs on China, a move that has provided some hope to Wall Street after a tumultuous period. Additionally, he stated he has 'no intention' of dismissing Federal Reserve Chair Jerome Powell, a notable departure from his prior criticisms. Despite these gestures of moderation, experts warn that the erratic nature of Trump's economic decisions has already inflicted substantial damage on the U.S. economy. Wendy Edelberg from the Brookings Institution emphasized that the uncertainty generated by the White House's unpredictable policies is more harmful than the tariffs themselves. The recent fluctuations in the stock market reflect this anxiety, with U.S. stocks experiencing a significant decline since Trump's inauguration, losing around $7 trillion in value since their peak just two months ago.
The looming threat of recession is becoming increasingly palpable, with forecasts suggesting a 50% to 70% chance of economic contraction this year. Economists like Kent Smetters from the Wharton School have pointed out that even if tariffs were completely lifted, the damage from policy uncertainty would still lead to a reduction in GDP. The administration's aggressive tariff strategy, which includes a range of tariffs on various goods, continues to create confusion among business leaders and trading partners. This lack of clarity has led to a confidence crisis, as many companies are hesitating to make investments or expand their operations. The Fed's recent report indicated that businesses are slowing hiring processes while awaiting clearer guidelines from the government. The long-term implications of Trump's trade policies are severe, with analysts noting that relationships with close allies, such as Canada, have been irreparably harmed. The overall sentiment among economists is one of caution, and they express concern about the enduring impacts of Trump's chaotic economic management.
TruthLens AI Analysis
The article provides an insightful look into the current economic situation under President Donald Trump's administration, highlighting the potential consequences of his fluctuating policies. It emphasizes the uncertainty created by the White House, which has been detrimental to economic stability and growth.
Impact of Leadership Decisions
Trump's recent shift in stance regarding tariffs and Federal Reserve Chair Jerome Powell indicates a reaction to mounting pressure from financial markets and business leaders. The brief reprieve in rhetoric could signal an attempt to restore confidence among investors, yet the volatility associated with his administration continues to loom large over the economy.
Economic Repercussions
The article notes that the stock market has seen significant losses since Trump took office, with a staggering $7 trillion wiped off the S&P 500. This points to broader economic concerns, suggesting that the turbulence in leadership could potentially lead the U.S. economy toward recession. The mention of uncertainty as a significant issue highlights that it is not just the specific policies but the erratic nature of communication and decision-making that poses risks.
Public Perception and Media Influence
The framing of Trump's actions as chaotic may aim to cultivate a perception of instability that resonates with the public. By focusing on the potential for damage and uncertainty, the article encourages readers to consider the broader implications of leadership style on economic performance. This narrative might also serve to galvanize opposition to Trump's economic policies among certain segments of the population.
Possible Manipulation and Hidden Agendas
The article could be perceived as manipulating public sentiment against Trump by emphasizing negative outcomes associated with his policies. The language used—such as "chaos," "haphazard approach," and "turbulence"—suggests a deliberate choice to create a sense of alarm. This could lead readers to view Trump's economic management in a more unfavorable light, potentially overshadowing any positive aspects of his policies.
Trustworthiness of the Article
While the article draws on credible sources and provides statistics on market performance, its framing suggests a bias towards critiquing Trump’s administration. The focus on negative outcomes without counterbalancing perspectives may lower its overall reliability for some readers. Thus, the article carries a level of subjectivity that should be acknowledged when assessing its truthfulness.
Broader Implications
The potential fallout from Trump's economic policies could influence not only the U.S. economy but also global markets, particularly if major tariff changes are implemented. The impact on specific stocks and sectors, particularly those heavily reliant on trade with China, might be significant.
Target Audience
This type of reporting appears to appeal more to those who are critical of Trump's presidency, such as Democrats and independent voters concerned about economic stability. The tone and content suggest an intention to resonate with audiences who prioritize economic governance and stability.
In conclusion, the article serves to underline the significant economic risks associated with Trump's leadership style, while also attempting to shape public perception against his administration. The manipulation of language and the focus on negative consequences indicate a clear agenda to critique Trump's approach to economic policy.