March 12, 2025 - 4:00pm
As stock prices tumbled at the start of this week, US President Donald Trump appeared late yesterday before the Business Roundtable, a gathering of leading CEOs. Amid threats of a global trade war, the past month has been brutal for the major American indices, and the President’s approval rating has already begun to drift downward.
At the time of writing, his net approval rating is 0.2 according to the RealClearPolitics average. Faced with these political and economic challenges, the White House needs to ensure in the days ahead that the concerns of working families are not drowned out by the campaign of maximal disruption.
Trump was elected in November with a dual and, to some extent, conflicting mandate: to bring change and to restore normality. Voters have applauded when he has been able to fuse those two aims. For instance, illegal border crossings are down substantially, and immigration remained far and away his strongest issue in the latest Emerson College Poll.
But that same poll found Trump 11 points underwater on the economy, and other polls have also registered growing voter scepticism about the new administration’s fiscal record. The economy has so far been an area where “change” and “normality” have been at odds.
In contrast with his first presidency, this time Trump has gone full disruptor. Helmed by Elon Musk, DOGE has launched a series of unprecedented cuts to federal personnel and programmes. The White House’s evolving tariff threats have delivered a shock to international relations and the stock market. Increased tariffs on China seem to some extent to be priced in by the market and expected by the public at large, but tariff battles with Mexico and especially Canada have caused many traders to smash the panic button. As part of his brinksmanship with Canada on Tuesday, Trump proposed doubling tariffs on steel and aluminium to 50% and destroying the Canadian automobile industry.
The administration has since walked back that proposal, but this level of economic uncertainty has worried the market. The Dow fell almost 500 points on Tuesday, while these tariffs have also proven politically controversial. CBS polling from February found that a clear majority of Americans approved of increased tariffs on Beijing, but public opinion was net negative concerning tariff hikes on North American and European countries. Almost two-thirds of those polled opposed raising tariffs on Canada.
Some of Trump’s populist allies argue that a few bumps should be expected as the American economy reorients from Wall Street to Main Street. By this account, a pro-industrial tariff strategy is a long-term play, even if there is some transitory pain along the way. Daniel McCarthy, one of the leading public theorists of a populist American Right, recently wrote that Trump knows “getting out of the trap decades of globalization […] will take a while”.
However, McCarthy also warned that tariffs were the biggest gamble of Trump’s presidency — and could blow up his administration if not handled properly. After decades of financialisation, Main Street is not entirely isolated from Wall Street. About two-thirds of working-age families are enrolled in some retirement programme; millions of majority-making swing voters are exposed to the stock market, possibly even more than they were in 1929. Trump flipped six states in 2024, in part because of voter dissatisfaction with the economy under Joe Biden. The economy was one of Trump’s strongest issues, in 2024 and gave him a critical opening with these voters. Yet severe economic disruption could sour the relationship.
Trump’s congressional allies are pushing the administration to roll out a more full-spectrum industrial policy, including tax and regulatory reforms to boost American manufacturing. That might give Republicans a more positive message and prove appealing to the market. If rebuilding the American manufacturing ecosystem is a long-term effort, it becomes even more important to meet voters where they are. Too much disruption too quickly could cause Republicans to be sent into exile for several terms, and shred their plans for a new golden age of American industry.
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SubscribeTrump should be very concerned about next month’s “snap elections” which now exist in America according Fred Bauer’s current narrative.
Unherd’s John Rapley has talked for months about stock prices being artificially high and headed for a correction. The Price to Sales Ratio or Stock Price to Revenue in many well performing 2024 stocks was extremely high. In other words the stock prices weren’t consistent with reality.
Furthermore when the government is subsidizing Capital either directly or indirectly that can’t go on forever without producing a bubble. As government spending decreases and the private sector increases its share of consumer purchases to government purchases than stocks will stabilize and then start going back up.
A real private sector economy can’t function off government purchases forever because inflation harms too many smaller firms in the supply chain, decreasing supply and producing inflation. To get out of an inflationary environment, the private sector has to do most of it’s selling directly to consumers.
How far stocks need to sink first due to lack of government subsidization is the question.
Agreed. Trump has been in office less than three months, and the mid-terms are a long way off yet. His approval rating now barely matters. A year from now, we’ll be starting to look at such things seriously. The market is definitely in need of an awful lot of correcting for a lot of things.
Beyond that, the stock market may or may not matter to ‘voters’. If a declining stock market corresponds with, for example, a decrease in inflation, Americans might consider that a good trade, especially those that care more about the price of food than the Dow Jones Industrial Average. If prices of basic necessities like food/fuel/clothing don’t rise and if there isn’t a sharp spike in unemployment, a bear market or even a recession might not generate much reaction.
Further, why do economic journalists like this author assume Trump won’t lay any economic crisis at the feet of his enemies. He’s already sold the narrative that corporate America and Wall Street sold the country’s factories and jobs down the river to China and others while pocketing the profits. Trump has mostly refrained from calling out the billionaire class personally and directly do as Bernie did, but it’s risky to make any assumptions about what Trump would or wouldn’t do. He’s possibly even laid a trap by poking investors enough to cause a panic that he can then turn around and blame on them, giving him even more authority to go even further in defense of ‘the people’. Then he can ‘resolve’ the crisis by taking a pound of flesh out of whoever ’caused’ it and then be praised as the people’s hero. These scenarios are possible because far too many people have internalized the idea that the interests of Wall Street and corporate America are fundamentally opposed, or at least indifferent to, their personal interests. That hasn’t happened to the same extent since the 1930’s, and we all know what happened then. The success of Sanders suggests how large this majority might be once other issues of contention are removed. This has profound political, social, and economic implications and we have journalists like this one cavalierly suggesting an economic crisis will fall entirely on Trump.
The sirens’ call to avoid “too much disruption too quickly”. The President is 78 and no other Republican has his electoral appeal. The Republicans will almost certainly lose control of the House at the end of next year either way. To effect change, it’s now or never.
Never is the correct answer.
The Republicans will get smashed in the mid-terms and every single executive order that Trump has made will be reversed on day one of the next Democrat presidency.
Trump will be erased and remembered only as a very weird aberration in American history.
You sound like a champagne socialist … totally divorced from reality.
You seem to have forgotten that its only 4 years since Trump lost in a historic landslide to a candidate that you guys didn’t seem to think that much of.
This isn’t some historic realignment of US politics. Its the last chance for a bunch of creeps and losers to force their insane ideas on the world before they go to jail where they belong.
Let’s hang this one up on the board with your other remarkably accurate predictions.
Ah yes – you were going to remind us of all the times my predictions had proven to be incorrect.
I’ll give you a free one – yes, I underestimated the stupidity, racism and misogyny of the American electorate on one occasion. My bad!
Lets see what else you’ve got.
This ought to be funny!
I love how the Plantation Party is doubling down on calling Republicans “racist” as they lose more and more minority voters every year. Keep it up! You’re totally winning!
Normally in situations like this, I get a beer from the fridge, sit on my deck chair and watch. That is certainly what I did in Trump’s first term. I’d be the first to admit that living in Australia insulates me somewhat from the damage. I’m not sure I will be especially well insulated from it this time though.
Ive no problem with tariffs, but they have to be targeted and serve a purpose. If you want to protect key industries such as steel and agriculture then it makes sense to avoid competing with cheap foreign imports. Likewise if you’re trying to decouple from a hostile regime then adding tariffs to their exports is a handy way of depriving them of funds.
However I see none of that with Trump. There’s no strategy involved, or long term aims. He’s simply petulantly throwing them out randomly at anything and everything
Look at total border crossing stats right now
That illegal immigration from Canada was a massive problem for the yanks wasn’t it!
Bit of context: RCP job approval from Inauguration in Jan to 2nd week of March (1st terms for multiple term presidents)
Bush: minus 7%
Obama: minus 11%
Trump 1: minus 6%
Biden: minus 6%
Trump 2: minus 3%
You are claiming that Obama was at minus 11% in the 2nd week of March of his first term?
I’ll do my own research but my recollection is that Obama was wildly popular in the early part of his first term.
Yes, I was right. Obama’s approval ratings in March 2009 were in the low to mid 60s.
Trump’s ratings in March 2017 were below 40%.
Your numbers are garbage. The only president less popular than Trump 2 was Trump 1 – and I can tell you with certainty that Trump 2 has a lot lower to go!
Trump 1 was a way funnier President than Trump 2 though.
No – i am saying that they dropped by 11% in the first 2 months. Though reading back what I wrote, I can see that I wasn’t clear.
I think that Matt is talking about how much their approval ratings changed in the same period, not how popular they were in absolute terms.
I was. Thank you.
This is Trumps second and last term, and he’s not going to back off.
He’s has a legacy to consider and he believes disrupting the present corrupt govts and international institutions is the way to ensure that legacy.
Fasten your seat belts.
Fasten your seat belts yes, because there will be a hell of a crash, wait until the stagflation gets going in a few months time. And all the job loses. Americans will pay so dearly for this 2nd term.
One of the great real potential ironies now, unforeseeable a few weeks ago, is Make America Great Again is going to flunk and instead help Make Canada Great Again, and even help Make Europe Great Again.
Too many continue to desperately search for some masterplan. There isn’t one. Yes maybe some of the chaos because he’s in a rush as he knows he’s now c600 days to mid terms. But much more is he’s an impulsive, improvisor with a retributive narcissistic character. Everyone knew what they were getting. Ego Elon has added to the cocktail a huge slug of hubris and illumination it’s about the v Rich after all.
Meanwhile Vlad’s cheque’s are in the post.
The economics journalists predicting economic doom are hoping Trump will trigger some reaction in the financial world that causes a recession and that public disapproval of that recession will destroy his political career. They’re still thinking in terms of standard politics and the ‘normal’ reaction to recessions such as happened to Bush, Clinton, and others. They assume the voters will blame Trump rather than Wall Street, the banks, and globalism, without questioning the things that they’re already upset about going back decades. It’s bold to make so many assumptions based on the past era even as it the era is visibly coming apart.
A crisis might or might not generate the usual response and a Keynesian intervention might or might not be politically possible given the nature of that reaction and the man in the white house. There are a lot of unknowns, but there is one thing that is fairly certain. 2008 poisoned the well against Wall Street for millennials/GenX on both sides of the aisle. There will be no bailout if Wall Street screws up to that extent again. The same goes for any billionaire who owns, controls, or influences a major corporation. The attitude towards a bailout would be so politically toxic that no politician would dare touch it. If that corporation has employees, they will be Trump’s priority, not the investors. He is far more likely to keep the factory workers working and/or appease voters by forcing ownership to sell at a loss and eat said loss themselves. I’ve heard noises to this effect with regards to US Steel and Tiktok. He might attempt to take direct command of the economy. He might well ask for, and receive, Congressional approval to move the US economy to a mobilized war state even in peacetime just to impose order.
Trump has demonstrated a willingness to step on anyone big or small to achieve his aims, and that should lead Wall Street and the billionaire class to do everything within their power to avoid a catastrophe with such a wild card as Trump in the White House. There’s no telling what he might do, and that should scare the crap out of them.
Given their failure to appreciate the long term consequences of anything for decades now, I’m not optimistic they’ll avoid setting off this bomb either. They don’t seem to get is they’re the ones holding it. When rulers make bad decisions, bad things tend to happen. When they make decisions that have short term benefits but long term costs over a long period of time, the consequences start to get bigger and bigger. This is how ruling classes fail and revolutions happen. We should be thankful if Trump and a mild stock market recession is the worst thing that happens in this transition time. What we are confronting is the failure of the ruling class at the end of the neoliberal post WWII period. That failure is no longer in dispute as the results are plain for all to see. That failure will have consequences, yet the magnitude of those consequences is not fully decided. They could yet make things much worse through further incompetence and pushing their old policies in defiance of the voters and all common sense. If the economic nuclear bomb goes off, Trump’s political legacy won’t be the only casualty.
“He might attempt to take direct command of the economy“. He can get some pointers on doing that from Kim Jong Un.
Or Chairman Xi for that matter. Most nations exert far more control over their national economies than the US has and that’s part of the reason we’re in the current untenable situation. Further, it’s not even unprecedented in this country. The US ran a mostly command economy in WWII. Lincoln wielded near autocratic power during the Civil War. It is possible to do such things reasonably effectively over a short time frame. It’s not nearly as far beyond the pale as you suggest.
At any rate, I was just pointing out that people can resort to desperate measures in a crisis situation. Much of FDR’s New Deal program was considered radical and almost revolutionary at the time and a lot of programs faced court challenges. In the end, the conditions of the depression led people to support FDR all the more strongly even though the depression continued. Things are not as bad as they were then… yet, but they could get considerably worse than they are. The political situation is such that the government doesn’t have the latitude to rescue banks like they did in 2008. Given today’s political climate and the level of distrust the people have for the government and Wall Street, Trump or any other politician will have to consider other options, and who knows what that might entail.
“Trump’s congressional allies are pushing the administration to roll out a more full-spectrum industrial policy, including tax and regulatory reforms to boost American manufacturing“. “Industrial Policy” = “Socialism”. I wonder if Trump realises that.
Stock market is down 10%, which is getting into recession territory. It’s extremely annoying to me, since I must take an RMD, based on Dec 31 accounting. I will hold off, but it will take a long time to recover from this unforced, unneeded, unwanted dip. Trump’s fantasy of “tariffs paying enough to cover my coming tax cut” is the stupidest idea in years. He’s not a smart man.
I just love how we were told repeatedly throughout the Biden administration that we weren’t in a recession, because employment was up, but oops the numbers were wrong, inflation was out of control, but only on a few things like food and housing you know luxury goods.
But the second Trump is in office and stocks start to correct from their overly inflated valuation that was driven primarily by wild speculation brought about by the GME debacle. Now it’s a recession any day now.
To top it all of I remember plenty of liberal rhetoric about how if you had any questions about the economic impact of lock down you wanted to murder grandma for the fat cats on Wall Street. Now suddenly it’s “think of the stock market.”
The liberal journalism political complex is alive and well it seems.
Trump is trying to do too much in two years because he knows his Presidency will end at the mid term elections and his last two years will be one impeachment after another. Ironically, however, by trying to do way too much on tariffs in his first two years he is guaranteeing that his Presidency will de facto come to an end in 2026!
Calm down. We haven’t had a correction in two years. Stocks and Shares are not the economy stupid.