If elected, Donald Trump’s 10 to 100% tariffs are likely to lead to a recession. They will pressure US profit margins, lead to job loss, weaken wage growth, and lower consumer spending – all classic causes of a recession.
Worse, Trump could easily mismanage it into another depression. We came close during the Great Recession of 2008, but Presidents George W. Bush’s and Barak Obama’s cabinets had qualified and experienced advisers who saved us . They called on Treasury Secretary Henry Paulson (previously Goldman Sach CEO), Fed Chairman Ben Bernanke, and NY Fed President Tim Geithner to convince an unwilling Congress to pass a $700 billion bank bailout and an economic stimulus package in the face of public outrage against bailing out Wall Street. Every one of them had long experience in US and international monetary policy.
To get a sense of the challenge Trump will face in a financial crisis, take a look at how the Bush and Obama cabinets were able to save us from the 2008 recession. They coordinated the major central banks to announce they would lower interest rates and followed by cutting their rate by 50 basis points. Even China was persuaded to join in. Then the Fed and five other central banks announced cross-border dollar liquidity through currency swaps.
So how would Trump fare under a similar crisis. First, he’s likely to assure us that “it will disappear like a miracle,” as he promised about the Covid pandemic. His decisions will be triggered by anger regarding events unrelated to America’s needs. For example, he sprung his 2017 tariffs out of outrage about Hope Hicks’ testimony regarding Russia’s election interference and the treatment of his son-in-law by his chief of staff. There were no approved explanations, no strategy to alert foreign trade partners or Congress, and no vetted communication plan other than an email that hadn’t been approved by White House advisers. No one at the State, Treasury or Defense Department Departments were told that a new policy was about to be announced.
Who will advise Trump? What we do know is that his picks will be loyalists and sycophants who won’t push back on his majesty’s decisions. We know JD Vance, who admitted lying that Springfield legal Haitian immigrants eat peoples pets and that childless “cat ladies are “sociopathic,” will be his VP.
It doesn’t matter whom else Trump says he’ll choose; he’ll do what he wants if elected. We can, however, speculate whom he’ll employ (at least for a while (only six of the 24 cabinet members lasted through his term.) Before Vance, he considered Tucker Carlson and Marjorie Taylor Greene as running mates, and Stephen Miller, who isn’t a lawyer, as Attorney General. They are emblematic of a future Trump cabinet: Carlson to misinform, Greene to spin conspiracy theories, and Miller to attack Trump’s opponents and critics.
Kamala’s Cabinet, on the other hand, makes Trump’s group look like elementary schoolers planning mischief. Her cabinet is worth a look.
