Why everything's coming up Trump on the economy

Why is President Trump escalating a trade war that had seemed dormant, threatening high tariffs on major trading partners, imported copper, and pharmaceuticals? A better question is "why not?"The big picture: Economic, market, and policy developments have been a wind at the president's back in the last two months. The threatened downsides of an erratic policy process have not materialized, and economic naysayers — for the moment, at least — look silly.This backdrop helps explain why Trump feels empowered to follow his instincts, which have long tilted toward aggressive use of trade barriers.Flashback: Three months ago, stock and bond markets were in freefall, forecasters issued recession predictions, retailers warned of empty store shelves, and the outlook for Republicans' signature tax legislation was decidedly choppy.None of that is true today.State of play: The unemployment rate is 4.1%, a tick below its April level. Inflation readings in April and May were lower than forecasters expected. (June inflation data starts rolling in next week.)The stock market is hovering near record highs, and 10-year Treasury yields are below their levels on Inauguration Day in January.While supply chains have been whipsawed by the on-and-off trade war, retailers have thus far been able to maintain steady availability of imported profits at normal prices. It reflects both pre-tariff inventory buildup and the willingness of suppliers and importers to absorb much of the cost of tariffs.The One Big, Beautiful Bill Act was signed into law on July 4, a self-imposed deadline from the president that many in the D.C. smart set thought was unlikely to be met.And while the Federal Reserve isn't cutting interest rates as rapidly or as much as the president would like, a September rate cut looks more likely than not.Reality check: The U.S. economy is a big, complex beast. It will take time for companies to adapt their pricing and supply chains to the kinds of massive shifts in trade policy seen so far in 2025 — and promised in the weeks ahead.The president has been quick to delay or adjust tariffs when the signs of pain become too apparent, evident in climbdowns on April 9, May 12, and this week.In other words, part of the reason April's dire predictions have not materialized is that White House policies have adapted.Of note: Just Tuesday, Trump threatened a 50% tariff on copper and up to 200% on pharmaceuticals. The threats "had effectively zero impact on broader equity valuations, interest rates or the value of the dollar on Tuesday afternoon," wrote RSM chief economist Joe Brusuelas in a note.What they're saying: "One gets the sense that although sector tariffs remain a risk to the economic outlook, corporate margins and commodity prices, investors do not believe that they are going to turn over the economy at current levels," Brusuelas wrote."Eventually," he added, "the laws of economic gravity will pull those valuations back to earth as firms' margins are compressed, inflation increases and real disposable incomes fall."The bottom line: It's so far, so good for the Trump 2.0 economy. But that's no guarantee it will stay that way.

Comments

World news

National Post

Ontario Trillium Benefit payments arrive this week. Here's what to know

about 2 hours ago

Independent

How Americans are helping Texas flood victims – and what you can do

about 3 hours ago

Independent

Laura Loomer ‘furious’ after aides stopped her from speaking with Trump during Les Miserables performance last month: report

about 3 hours ago

Dad tried to kayak in Texas floods to save his young daughters, whose last texts were ‘I love you’

Independent

Comments

World news

Ontario Trillium Benefit payments arrive this week. Here's what to know

How Americans are helping Texas flood victims – and what you can do

Laura Loomer ‘furious’ after aides stopped her from speaking with Trump during Les Miserables performance last month: report

Dad tried to kayak in Texas floods to save his young daughters, whose last texts were ‘I love you’

Trump seems unaware who ordered pause on Ukraine weapons shipments

Can Trump’s exemptions for undocumented farm laborers succeed without angering MAGA?

Attorney General Pam Bondi tries to explain the missing minute from Epstein prison footage

New Mexico house swept away during flash flooding in dramatic video

Worker trying to repair roof at retirement community dies after attack by a swarm of killer bees

‘How disgusting are you?’ Judge rips former substitute teacher at his sentencing for assaulting elementary students

How Trump officials botched a deal to get Americans out of Venezuelan prisons in exchange for deported migrants

Nearly a third of US teens have prediabetes, CDC finds

Another day, another US presidential fallout: Trump takes aim at Putin

Trump claimed victory against the Houthis in fight over Red Sea shipping. Now they are sinking tankers again

Prime mistake! Woman sent hundreds of returned Amazon packages after Chinese company used her address on labels

Israel insists on keeping troops in Gaza. That complicates truce talks with Hamas

Trump says he ‘hasn’t thought’ about who went behind his back to stop Ukraine weapons deliveries

Tucker Carlson likens Laura Loomer to a ‘child wielding a loaded firearm called Twitter’

Rhode Island man faces charges after threatening to kill Trump, Bondi and Stephen Miller on Truth Social

Senate confirms new FAA administrator at a time of rising concern about air safety

'Don't look out the window': Passengers speak of horror as man 'threw himself into jet engine' at airport

How changes in California culture have influenced the evolution of wild animals in Los Angeles

CBC 'refusing to accept Travis Dhanraj's resignation' over 'abusive work culture,' lawyer says

Texas floods latest: 119 dead, more than 160 remain missing as questions mount over lack of warnings

Rare notoriously stinky flower begins blooming in California

X on the hunt for a new CEO after Linda Yaccarino steps down two years after taking top job at Musk’s platform

‘They are trying to sow fear’: How Russia has amped up its aerial strikes on Ukraine

Great white shark sneaks up on Cape Cod paddleboarders: ‘Got to get out of here’

The Texas floods are not an isolated tragedy. A look at history’s deadliest storms

The American diet is being blamed for a worrying rise in colon cancer

Child dies after being left in hot car by mother who went to get lip filler, police say

Jake Tapper says Trump is gaslighting the public on Epstein: ‘You’re being played for fools’

Donald J. Trump Boulevard is coming to Florida after city approves name change

Trump delayed his tariff deadline after Treasury Secretary pleaded for more time to get deals done, report says

White House chief of staff details Musk’s ‘fatherly fixation’ with Trump and their falling out in new interview

FEMA sends under 100 staffers to Texas flooding disaster as state rolls out nearly 1,800 responders

Europe wildfires map: Where summer fires have struck from France and Spain to Greece

Greg Abbott gives bizarre football analogy when asked who is to blame for deaths in Texas floods

Suspect accused of kidnapping woman, raping her and keeping her locked in an Arizona shed for weeks

Donald Trump preparing to visit UK in coming weeks

Police raid office of French far-right party in fraud probe

DOGE bros are at war with the White House on the agency’s future amid Trump-Musk feud, report says

As Trump pledges more weapons for Ukraine - how reliant is Kyiv on US military assistance?

Landmark ruling made over Russia’s responsibility for downing flight MH17

Pope Leo interrupts holiday to issue warning: ‘We live in a world that is burning’

Jeffrey Epstein’s brother has his say on Trump admin’s claims about sex offender’s suicide

Country singer Pat Green confirms ‘multiple family members’ died in Texas flooding

Doctor who treated Erin Patterson’s death cap mushroom victims reveals alarming details

BBC bosses ‘should have kept close eye on’ Gregg Wallace, say insiders

Home Office age errors put hundreds of asylum-seeking children ‘at risk of abuse’

Reeves’s pension plan blasted by Bank of England governor in ‘nuclear’ intervention

Christian Horner lost the battle of F1’s two biggest egos

Four things to know about jury-free trials before forming an opinion

I took a DNA test to discover my perfect sleep routine – I feel calmer and need less coffee

The Salt Path scandal proves you should never trust a memoir

Amazon accused of selling ‘slave-labour’ fashion on its website

Five radical moves Starmer can make to crack down on small boats

We’re Brits running our own businesses in Spain – navigating tax is a nightmare

South Korea sends 6 rescued North Koreans back across sea border

Turkish court orders ban on Elon Musk's AI chatbot Grok for offensive content