Chaos Theory: How Trump is Destroying the Economy

Trump's erratic, chaotic governing style is dragging down the economy

Typically, the economy operates outside the control of the President. Presidents can pass laws, infrastructure bills, stimulus packages, and cut taxes. These actions affect things on the margins, but the big drivers are usually global. For example, we can debate till the cows come home whether President Biden ran the economy too hot while trying to bring us out of COVID, but that doesn’t explain why inflation was a global phenomenon. Under Obama, the economic recovery was slowed by a financial panic in Europe.

However, in less than two months, Donald Trump alone has put the U.S. economy in a precarious position. Trump inherited a thriving economy from Biden — albeit one still dealing with the impact of high prices. Economic growth was strong and unemployment was historically low.

That’s all changed.

Consumer confidence dropped precipitously this month. The stock market is in the gutter, and on Monday, the Federal Reserve Bank of Atlanta forecast a 2.8% contraction in economic growth.

Why is this happening? Here’s how Reuters described the situation:

Layoffs announced by U.S.-employers jumped to levels not seen since the last two recessions amid mass federal government job cuts, canceled contracts and fears of trade wars, offering the clearest sign yet of the toll taken on the labor market by the policies of President Donald Trump's administration.

Global outplacement firm Challenger, Gray & Christmas said on Thursday that planned job cuts vaulted 245% to 172,017 last month, the highest level since July 2020, when the economy was in the grips of the COVID-19 pandemic. It was the highest February total since the Great Recession 16 years ago.

Chaos has defined Trump’s second term; and his chaotic leadership style is hurting the economy.

Pure Chaos

How Trump has handled the tariffs is a perfect example of the chaotic approach to the economy.

• On February 1st, Trump signed an executive order implementing 25% tariffs on goods from Mexico and Canada and a 10% tariff on Chinese imports. The EO said the tariffs would take effect on February 4th;

• On February 3rd, Trump suspended the tariffs on Canada and Mexico for a month in exchange for fake concessions from the two nations;

• On March 4th, Trump implemented new 25% tariffs on imports from Mexico and Canada, and increased tariffs on Chinese goods by an additional 10%;

• On March 5th, he exempted automobiles; and

• On March 6th, Trump announced he was suspending the tariffs on most goods from Mexico and Canada.

It doesn’t end with tariffs.