Thank God for the stock market.
The market is one of the only things Donald Trump can be expected to listen to — likely more than polls and certainly more than his advisors — even when he doesn’t want to hear what it’s saying.
During his first term, Trump routinely took credit for every new market high, noting at one point that “the reason our stock market is so successful is because of me.” When the market did well under President Biden, Trump claimed that it was because of the expectation that he would win the next election.
It’s all nonsense, but he believes it, and he wants everyone else to believe it too. And that could be to the country’s benefit now, because when it became clear last week that Trump was determined to follow through on his cockamamie tariff threats, the markets tumbled. And on Monday, the administration reached deals to pause tariffs on Mexico and Canada for a month.
Many of the president’s fat-cat hangers-on — including his new Treasury secretary, Scott Bessent — had convinced themselves that Trump wasn’t really the “tariff man” he describes himself as. They clicked the heels of their ruby slippers together, repeating, “It’s just a negotiation tool. It’s just a negotiation tool.”
Nope. When asked Friday night whether our three largest trading partners — Canada, Mexico and China — could do anything to prevent the implementation of his threatened tariffs, Trump said, “No. Nothing.” He went on to explain — again — that he thinks tariffs are valuable and desirable in their own right, not just as a means to extract concessions of any kind. “It’s a pure economic” measure, he said.
The Wall Street Journal lambasted the lunacy of it. Business and union leaders joined in publicly and privately, beseeching him not to go down this idiotic road.
His response? To go on the attack, declaring on Truth Social, “Anybody that’s against Tariffs, including the Fake News Wall Street Journal, and Hedge Funds, is only against them because these people or entities are controlled by China, or other foreign or domestic companies.”
That’s all nonsense too, but I remain especially befuddled by the insinuation that it’s somehow sinister or unpatriotic for “entities” “controlled” by “domestic companies” to oppose tariffs. Isn’t that another way of saying American businesses don’t want to be subject to additional taxes?
Politicians across the ideological spectrum have resented financial markets for not cooperating with them. Former President Clinton was famously furious that the success of his administration might hinge on the approval of the bond markets. His political guru James Carville once quipped, “I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody.”
And that’s what we should be grateful for. It’s already abundantly clear that Trump can intimidate, corrupt, steamroller or ignore aides, legislators, donors and journalists who tell him the truth. The markets are the exception.
Indeed, many Wall Street titans now support Trump politically. But they still buy and sell stocks based on economic reality. And the economic reality is that protectionism tends to hurt the economy more than it helps. As the economist Henry George said a century ago, “What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war.”
Protectionism also invites political corruption because firms seek, well, protection from the government’s bad policies. Trump loves to dole out favors and punishment on a case-by-case basis, so it’s no wonder he enjoys a policy allowing him to pick winners and losers.
That’s why so many sensible business leaders are sucking up to him and lying about the wisdom of these policies: They want to stay on his good side. But while individuals may flatter him and ingratiate themselves, the market doesn’t.
Opponents of capitalism resent the market’s impersonal efficiency. They want economics to be an extension of politics. They mistake the amorality of economic decision-making for the immorality they ascribe to their political enemies.
For most of my life, such people tended to reside on the ideological left. Progressives decried excessive concern about inflation or debt as a pretext for opposing more “generous” policies favoring their priorities or constituencies. They’re now joined by many on the nationalist right who want to see business and markets do more to put “America first.”
The good news is that our markets are strong and diverse enough to resist such moral and intellectual corruption. Once-principled free-trade Republicans and Wall Street tycoons alike will continue to lie about Trump’s economic wisdom, but the market will probably continue to tell the truth. I hope he listens.
