President Donald Trump wasted no time after he came into office for his second term in making strong economic moves—and he still has more to go. We’re still waiting to see what their full effects will be.
One of the most obvious actions was his imposition of tariffs, at first delayed and then put in place. Tariffs against Canada and Mexico he connected to the war on drugs, demanding that they reduce the flow of fentanyl into the US, while tariffs on Europe, China and the rest of the world he said were mostly due to economic policy.
Other moves affecting American and world economics are the government funding cuts by DOGE and the possibility of the renewal or expansion of tax cuts on the horizon.
The effects of Trump’s economic policies are yet to be entirely clear. Consumer confidence has dropped, and the US stock market has moved into correction territory—while the European and Chinese stock markets have moved up. The price of gasoline appears to be dropping, and inflation was down in February—but the numbers for March, after the tariffs, aren’t out yet.
Trump himself has said that he wouldn’t want to predict whether there will be a recession this year, and Vice President Vance and some of Trump’s other Cabinet members and advisers have suggested that there may be a period of pain before the economic boom they say will eventually happen.
To understand more about what we should be looking at in the Trump economy, I spoke with economist Stephen Moore, who advised Trump on economic policies during his 2016 presidential campaign.
We aren’t even 100 days into the Trump administration, but there has been a lot of activity in all areas, and especially on the economic front. What are you observing?
I think Trump is pressing most of the right buttons. I love what DOGE is doing in terms of finding the hundreds of billions of dollars of fraud, inefficiency and waste in the government. We have to drain that from the system. We have to immediately start producing more energy—our oil, gas, coal and nuclear power—to bring down energy costs and create jobs in America. I love what he’s talking about in terms of deregulation, and a lot of that has already started to happen at the major regulatory agencies, which is the equivalent of a trillion-dollar tax cut in terms of reducing the costs on our businesses. It’s incredible that it took Trump less than a month to solve the border crisis; it’s over. We are now seeing record low numbers of entries after having seen record high numbers. I like all that, and I think it’s critical that we get the tax cut done as quickly as possible—hopefully by Memorial Day. I’m a little nervous about the tariffs, though.
When you say you’re nervous about the tariffs, do you mean about where they might lead us or what he has already done?
Trump wants freer and fairer trade, and he wants other countries to reduce their tariffs; I’m certainly in favor of that. Some of these countries have very abusive treatment of American products, including Canada, which has over 100% tariffs on some of our agriculture and dairy products. China has 25% tariffs, whereas our tariffs were at five or six percent. Trump wants a level playing field. Now, I do believe that all of this tariff talk and all of the talk about retaliation has really hurt the stock market. There’s no question about that. But I think at the end of the day Trump will get a better deal—he’s a master negotiator—and when that happens, the market will really snap back.
In addition to the stock market being hit, consumer confidence has also plummeted. Is that a self-fulfilling prophecy?
Declining consumer confidence does mean that people are going to hunker down and not spend too much because they’re more fearful. We want people to be confident, not fearful. And those consumer confidence numbers are very concerning. However, I was looking at a poll today asking, “Do you think the country is on the right track or on the wrong track?” Less than half of Americans think that the economy is on the right track, but believe it or not that’s the highest number—I believe it was about 45%—we’ve seen in well over a decade. People are getting a little more optimistic as they see Trump’s policies. My guess is that the next three to six months can have some tough sledding, because there’s a lot of residual hangover effect from the economic confidence in Biden. But once we get past that, almost everything that Trump has tried to do is very bullish for the markets.
You listed the positive things that you’re observing, but you noted that you’re nervous about tariffs. Would you advise him differently in that area, or are you just concerned about some of the impacts as the process plays itself out?
He’s the strategist, and he knows a lot more about this than I do, but if he asked me, I’d give him a couple of words of advice. I’d say, “Mr. President, right now get the tax cut signed, sealed and delivered. That’s really bullish for the stock market and would be a very strong stimulus for economic growth. Once you have that done, then you can go forward with your tariff agenda.” Starting with that has been a bit traumatic for investors.
The other thing I’d ask Trump to do would be to go after our enemies, not our friends. Canada and Mexico are two of our most important allies. We need a strong and stable Mexico, and Canada is almost the 51st state (laughs). They aren’t really, but they are a very important and good neighbor to our country. I’d like to see the tariffs aimed at China and to some extent the Europeans too; they’ve really mistreated us.
From my perspective, his targeting Canada has other intents other than pure economics, but I’m not sure if you would agree with that.
I’m not a foreign policy expert, so I don’t know a lot about that. I think Trump’s rhetoric has been a bit provocative with the whole idea of making them the 51st state and changing the boundaries and that kind of thing. Look, both countries benefit from a free-trade environment, and we both benefit from having a very friendly environment between the two countries. I don’t want to see that change.
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