Has anybody seen Donald Trump — you know, the guy who ran for president in 2024?
There’s somebody in the White House who looks like Trump. But he sounds almost like the anti-Trump. Instead of talking up a great economy and a booming stock market, he’s giving off bad vibes about pain, disturbances, and recession.
Trump won the 2024 presidential election largely because voters thought he’d do a better job of lowering inflation and boosting their personal prosperity. Trump played into that with his usual bombastic pronouncements about the disastrous economy under President Biden and his fellow Democrats — and the rapid turnaround that would take place if Trump got a second chance at managing the economy.
Here are some of the contrasting statements between Candidate Trump and President Trump:
Candidate Trump, Aug. 15, 2024: “When I win, I will immediately bring prices down. Starting on day one.”
President Trump, Feb. 18, 2025: “Inflation is back. I had nothing to do with it.”
Candidate Trump, Nov. 4, 2024: “We are quickly going to turn this economic nightmare into an economic miracle.”
President Trump, March 9, 2025: “I hate to predict things like [a recession]. There is a period of transition. We’re bringing wealth back to America. It takes a little time.”
Candidate Trump, Sept. 23, 2024: “Vote Trump and your incomes will soar. Your net worth will skyrocket.”
President Trump, March 9, 2025: “You can’t really watch the stock market.”
And here’s a bonus contrast:
Candidate Trump, March 11, 2024: Electric vehicles “don’t go far, they cost too much, and they’re all going to be made in China.”
President Trump, March 11, 2025: “I’m going to buy a brand new Tesla.”
Buying a new Tesla? President Trump and friend. (AP Photo/Alex Brandon, Archive) ·ASSOCIATED PRESS
So, Trump is struggling to live up to some of his more notable campaign promises. Inflation has ticked up, not down, since he took office. The stock market he often bragged would boom under his presidency is tanking instead, with the S&P 500 (^GSPC) stock index down nearly 7% since he took office. The “American exceptionalism” trade, based on the idea that Trump would turbocharge the US economy, is dead. Investors are ditching US assets for usually lagging European ones.
Many politicians overpromise on the campaign trail and underdeliver in office. But something more sinister seems to be going on with Trump. He’s not an unwitting victim of external forces he can’t control, like the hapless George W. Bush trying to understand a multicausal financial crash that nearly triggered a depression in 2008.
Trump himself is actually the cause of a slowing economy, tumbling markets, and growing gloom about where Trump is taking the nation.
Trump’s aggressive tariff policy is almost singlehandedly causing America’s new economic turmoil. A contributing factor is Trump’s dismantling of the federal government under efficiency bro Elon Musk. There’s no black swan event that came from the murky depths or tail risk that suddenly metastasized. Trump himself is the black swan.
Trump so far has slapped tariffs on imports from Canada, Mexico, China, and several other countries, with more on the way. Confounding market expectations, Trump seems unmoved by adverse market reactions that represent investors giving his tariffs a huge raspberry. From Feb. 19 to March 10, Trump’s escalating tariff announcements drove the S&P 500 index down 8.6%. Traders have been hoping Trump will relent and give stocks a breather, which was the pattern during Trump’s first trade war in 2018. Instead, Trump announced more tariffs on Canadian imports on March 11, driving stocks down further.
When Trump took office, many on Wall Street thought he would threaten high tariffs but mainly use that as a negotiating tool, eventually giving in on many of his worst threats. That could still happen. But expectations for markets and the economy are rapidly changing in the meantime.
Prominent forecasters, including Goldman Sachs and Morgan Stanley, are downgrading their 2025 outlook for growth and raising their inflation estimates. "Stagflation" is now a market concern. Trump policies are the sole reason. Many economists are also raising their recession odds. Mark Zandi of Moody’s Analytics, as one example, has raised his risk of recession in the next year from 15% at the start of 2025 to 35% now.
Why has Trump seemingly abandoned his campaign promises and endangered his reputation as a businessman-president who knows how to make the economy hum? Nobody can be sure, but there are a few possibilities.
One could be that Trump has blind faith in tariffs and truly believes they will someday trigger a US manufacturing boom that lifts the whole economy. Few economists agree with him, and many think tariffs will depress the US economy with no offsetting upside. But Trump doesn’t care what experts think, as everybody should know by now.
Trump may also be betting that tax cuts and tax-cut extensions coming later this year will serve as a powerful stimulus that offsets any damage his tariffs cause. Tax cuts probably will be stimulative, as long as they don’t cause new worries about the mushrooming national debt. But deliberately weakening the economy along the way will diminish any boost tax cuts bring.
It's also possible Trump was just snowing voters last year when he promised economic magic. He doesn’t have to worry about reelection, he’s not personally hurt by any of his own policies, and maybe this is the chance to prove once and for all that tariffs are what America really needs. Even Superman had an alter ego.
Rick Newman is a senior columnist for Yahoo Finance. Follow him on Bluesky and X: @rickjnewman.
