Trump 2.0 is in jeopardy at 100 days
Second terms as president are rarely successful, and Donald Trump’s won’t be any different based on his first 100 days in office. If the President wishes to protect his last years from the economic and foreign policy shocks he has unleashed, a significant overhaul is required.
His ambition and energy are undeniable. Mr. Trump has had some success pushing forward on several fronts. After the Biden assault on fossil fuels, his increase of U.S. energy output is going well and is badly needed. He has quickly put a stop to the border problem. Additionally, he is reversing federal attacks on traditional American values, such the enforcement of racial bias. Mr. Trump is doing what he was elected to do: he is combating the excesses of the left on censorship, culture, and climate change.
The execution of other initiatives has fallen short of expectations. That seems to be the case with DOGE, which we have backed but whose operations have been so hectic that it is unclear what it is accomplishing. Simple aims like USAID result in symbolic successes without a real shift in the way government is developing. More reform suggestions will be included in the Trump budget, provided the White House can pass them through Congress. He urgently needs a tax bill that supports growth.
One issue has been needless excess, even on well-known causes. Harvard and other colleges must adapt, but attempting to control their professors and curriculum is an infringement on free speech and could result in legal failure. His efforts to deport criminals are admirable, but they will be ruined if he plays with the courts and denies due process. “If something is worth doing, it’s worth doing too much” appears to be the White House motto. This is particularly true with regard to tariffs, which have the potential to end his presidency. Tariffs have the reverse effect of the inflation control and real income growth that Mr. Trump was elected to achieve. They ensure that prices for imported items will rise at least once and then continue to rise throughout the economy. They foretell shortages for both consumers and companies that import components and goods.
Since Richard Nixon’s 1971 blow-up of Bretton Woods, which unleashed inflation that Nixon attempted to curb with price and wage controls as well as a tariff, the tariffs represent the biggest economic policy shock. Perhaps even more than Watergate, the economic fallout destroyed Nixon’s second term. Thinking that the harm caused by tariffs is limited to domestic markets is incorrect. Global trust in American dependability has been eroded by the haphazard attack on both allies and adversaries. Last Monday, Mr. Trump’s investor and biggest donor, Ken Griffin, described it as a self-inflicted injury to the American image. The U.S. is giving up its position as the world’s economic leader needlessly.
China is already abusing its position as a more reliable large market by wooing U.S. friends. Building a trade alliance to curb China’s frequently aggressive economic practices will be considerably more difficult as a result. Beijing must find it amusing that Mr. Trump referred to us as “China Loving” last week. The true gift to Xi Jinping is the tariffs that Mr. Trump has imposed on friends. Given that he is now discussing signing almost 200 trade agreements, there are indications that Mr. Trump is finally realizing some of the hazards associated with tariffs. Additionally, he has hinted that he may unilaterally lower his 145% tariff on imports from China. As we stated last week regarding the reversal by the French socialist of the 1980s, we would love nothing more than to witness a retreat—a “Mitterrand moment.” However, Mr. Trump is still a long way from changing course, and negotiating those trade agreements won’t be simple.
Thus far, Mr. Trump’s foreign strategy during his second term is still being developed. After Joe Biden’s hesitancy, he is attempting to retake the sea passages in the Middle East from the Houthis. Additionally, he is putting Iran under “maximum pressure” to stop its nuclear development. These are indicators of hope. His biased pursuit of peace in Ukraine is the primary reason for concern. Up until this past weekend, he has hardly spoken negatively about Vladimir Putin while pressuring Ukraine to make compromises that may condemn it to more raids. If there is an armistice, many things will depend on its terms, not just for the future of Europe.
American deterrence was weakened by Joe Biden’s withdrawal from Afghanistan. A disaster in Ukraine would have the same effect on Mr. Trump, with implications for North Korea, Iran, and particularly China’s Pacific aspirations. If China attempts a partial embargo or decides to seize Taiwan’s outer islands, don’t be shocked. In October, Mr. Trump promised to use tariffs to retaliate for such a provocation, but he has previously used that tactic without success.
In part, voters’ positive memories of Mr. Trump’s first term’s economy helped him win reelection. However, his pursuit of traditional GOP issues like tax reform and deregulation was largely responsible for that accomplishment. His obsessions with trade and foreign policy are being indulged this term, with unfavorable initial outcomes. If he ignores the warnings, he will fail.
