In his first address to Congress since beginning a tumultuous second term, US President Donald Trump proudly claimed on Tuesday night that he was “just getting started”. That is a bad omen for the world’s largest economy. The optimism among companies and investors that came with the businessman’s election victory is rapidly waning. After the president confirmed tariffs on Mexico, Canada and China on Monday night, the S&P 500 initially erased all the gains it had made since the November polls. Consumer confidence has plunged. Manufacturers are reporting steep declines in new orders and employment, and bearish investor sentiment has shot well above its historic average.
Uncertainty is clouding the data and forecasts. Still, it is clear that the president has squandered what was a decent economic inheritance. Not long ago price pressures were fading, the US Federal Reserve was on the cusp of a steady rate-cutting cycle into a resilient economy, and the S&P 500 was gliding upwards. This is no longer true.
The depressing turnaround is a product of the administration’s pursuit of on-and-off import duties, and a chaotic policy agenda. The White House may believe it has a plan but America’s economic exceptionalism, from its relentless consumer spending and booming stock market to its reputation for dependable economic governance, is the collateral damage.