Littwin:  I may not know much about economics, but I know what the market downturn means for my bottom line

As the stock market was dropping yet again on Tuesday, and my 401(k) was starting to look more like a 201(k), I can only ask what I assume to be the most critical question of the day:

What in the hell is going on?

Why has Donald Trump started a trade war on multiple fronts that pretty much everyone not related to Trump or Elon Musk — whose Tesla stock was hit especially hard Monday — believes will end badly, if not catastrophically?

Why has Trump been forced to admit that we may be headed toward a recession after spending his entire campaign promising, “We will begin a new era of soaring incomes. Skyrocketing wealth. Millions and millions of new jobs and a booming middle class. We are going to boom like we’ve never boomed before.”

Well, the market is going boom and gloom and doom, which I don’t think is what Trump meant. We know how closely Trump ties the good fortunes of the stock market to the economy. We  know that the stock market is now at a lower point than on that dark November day when Trump was elected. And, yes, the price of eggs is that much higher.

So, what in the hell is going on?

Is the trade war a stand in for starting a real war, in which there are real casualties and not just damage to the global economy?

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Did the rich guys in the market suddenly understand that Donald Trump’s tariff threats are genuine, that the chances of recession or even stagflation are growing, while Trump’s objective for punishing, say Canada, maybe our closest ally, with even more tariffs is, well, nuts?

I know they noticed that JP Morgan Chase has upgraded the likelihood of a recession this year from 30% to 40% because of what it called “extreme U.S. policies.” Meanwhile Goldman Sachs moved its recession prediction from 15% to 25%.  

No one is sure what comes next. Trump, who, whatever he says, inherited a good economy, has paused and unpaused and then repaused certain tariffs. But once Ontario — that’s a Canadian province and a might-be state someday — threatened costly surcharges on electricity sold to the United States, Trump threatened to double the tariffs on Canadian exports of aluminum and steel. Ontario had no choice but to back down. That’s what friends are for?

I put it all down to bully politics, which has been the hallmark of the Trump Restoration. Bullying Ukraine, which has now agreed to a 30-day ceasefire in its war with Russia. As of this writing, Vladimir Putin hasn’t said whether he will go along. Since Trump got his way — and because Volodymyr Zelenskyy has been more “respectful” —  we have restored military aid to Ukraine. At least for now.

The bullying is everywhere. Bullying NATO allies. Bullying Panama and Denmark. Bullying GOP congresspeople. Bullying — actually, ethnic cleansing goes beyond ordinary bullying — Palestinians in Gaza, and even Palestinians at Columbia University, where one such protester, who is here legally, has been threatened with deportation. Bullying whomever or whatever might be in his way. 

Are tariffs just another way for Trump to bully our onetime friends, even as he’s hurting the economy at the same time?

I don’t know much about the intricacies and nuances of economic policy, but I do know something about Trump. Back when I joined The Sun nearly five years ago — for those thinking of an anniversary gift, the date was May 15, 2020 — I looked up my first reference to Donald Trump. It was in a Baltimore Sun column in 1986 when I presciently called him — I swear this is true — a “threat to democracy.”

And I also know that Trump has been, well, trumpeting tariffs for decades now. He may not know how they work, but he’s sure that they do. As one Wall Street analyst put it, “He is telling us, in everything he is doing, that he is not kidding around. On tariffs, he believes it in his bones.”

That’s why Trump idolizes William McKinley, who strongly promoted protectionist tariffs during his mostly obscure Gilded Age presidency. 

But it turns out that on the day before McKinley was shot by an assassin — he died a few days later —  McKinley made a speech repudiating tariffs and embracing free trade. If Trump knew that, maybe he’d go back to calling the Alaskan mountain its true name, Denali, instead of Mount McKinley.

But, look, as for the economy, I confess I’m no expert. I took Econ 101 in college many decades ago, and I remember something about supply and demand, capitalism vs. Marxism, Adam Smith and the invisible hand, the Keynesian economic model.

Most of all, I remember that my class attendance was, let’s say, spotty. It turned out there was a pool hall on the way to class and 9-ball often seemed more interesting, and even occasionally more lucrative, than either macro- or microeconomics.

But if I’m not an expert, I do know just enough to listen to actual experts, including those who can explain why trade wars with Canada and Mexico, whose economies are so intertwined with ours, make absolutely no sense for anyone. And that the coming trade war with Europe could be explosive.

Trump says he is imposing the tariffs as punishment because Canada and Mexico and China haven’t done enough to stop fentanyl traffic to the United States. Everyone knows, including Trump, that fentanyl traffic from Canada is minimal. The rationale is laughable. Everyone knows, or ought to know, that Mexico has made strides of late and migration through the southern border has dropped precipitously. And that even China has done some work to stop the flow of drugs to the U.S.

And the real issue is why there’s so much demand for fentanyl in the United States.

If there is demand — see, I really did learn some stuff in college — there will be supply.

Meanwhile Trump and his White House team have greatly exaggerated/lied about  fentanyl-related deaths. In his Inauguration Day speech, Trump said drug cartels are “killing 250,000 or 300,000 American people per year.” More recently, White House spokesperson Karoline Leavitt defended the use of tariffs because fentanyl has “killed tens of millions of Americans.”

According to reports from the CDC, which may or may not still be in business, when the opioid crisis hit its peak in 2022 and 2023, total overdose deaths from street drugs, ranging from fentanyl to cocaine and heroin, peaked at around 114,000 a year. And deaths from street drugs have fallen 21% since June 2023.

If my economic background is shallow, I do read the Wall Street Journal — the news pages, not the editorials — to try to keep up.

In an article Tuesday about how fear has finally hit the markets, the Journal quoted Michael Strain, head of economic policy at the right-leaning American Enterprise Institute, saying that he once believed the Trump administration was actually “worried about their policies really slowing down the economy.”

Now he isn’t so sure. Neither is Dario Perkins,  an economist at GlobalData TS Lombard in London.

“Now, there’s almost a sense that if something goes wrong in the economy, then that’s fine,” Perkins said. “That’s making people quite nervous …”

People have noticed. In November, a study showed consumer confidence had hit a four-year high. On Monday, the same survey showed the largest monthly drop since 2023. 

Of course people are noticing. They, like me, may not be able to read a company spreadsheet, but they can read the Trump recession headlines and can definitely check their 401(k) balances.

Like much that has occurred since Trump returned to the White House, up in the stock market has now turned to down. I have long said that with Trump, there is no bottom. But there has to be a bottom for the stock market (we hope). 

The question before us — boom, boom — is how much more down we can possibly take.

Mike Littwin has been a columnist for too many years to count. He has covered Dr. J, four presidential inaugurations, six national conventions and countless brain-numbing speeches in the New Hampshire and Iowa snow. Sign up for Mike’s newsletter.

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