As we moved through the fourth month of the Donald Trump presidency, chaos seems to be the situation for the economy. The recent announcement that the GDP had shrunk slightly has spooked the markets, as the up-and-down nature of Trump’s tariff policies has created what Robert Higgs has called “regime uncertainty,” which is bad news for anyone who had hoped that Trump would undo at least some of the economic damage caused by the Joe Biden administration.
Ever since the first Franklin Roosevelt administration launched its “First 100 Days” initiative in 1933, many presidents since then have sought to meet that dubious standard. Given that FDR’s famed 100 Days consisted of unprecedented transferral of power from Congress to the executive branch—with disastrous laws such as the Agricultural Adjustment Act and the National Industrial Recovery Act being passed during that time—the Roosevelt administration spent its time damaging the economy and the nation’s body politic. Nonetheless, the media and other pundits tend to judge an incoming administration by its first 100 days.
By any conventional measurement, Trump’s first 100 days have been tumultuous. This page—as it should—has taken a hard line against the implementation of the new tariffs and there is no backtracking from that criticism, even as many of Trump’s supporters have angrily reacted to the criticism. Furthermore, even Trump has thrown cold water on economic expectations with his recent “two dolls” comments regarding how his tariffs have driven up prices for some goods. …
While the US economy is not yet in a recession, Trump’s anti-business rhetoric, his arbitrary decisions, and his imposition of tariffs at ruinous levels are creating uncertainty within the business community. We have not seen this level of business uncertainty in 90 years, going back to the FDR administration.
Should the US economy suffer a recession, a recovery will depend upon new business investment, as firms move away from unprofitable lines of production and find new lines that are more promising. However, if Trump’s regime uncertainty continues, we could find ourselves in an economy that is stagnant and moving nowhere.
Who wants to invest in anything while there is nothing but uncertainty all throughout the economy? Why would anyone invest in future projects while the state is arbitrarily changing the background of your decision making? Trump may just be shaking the box a bit too much for many entrepreneurs to make any decisions. Perhaps shaking the box to see what will fall out is an idea that works in the political arena or the sports arena or the diplomacy arena but not the economic arena. As a Wharton economics graduate, he should understand this. I am beginning to wonder how he passed his economics courses with policy like this.