Trump's economic gamble

His recent rhetoric suggests a shift to an ideology that welcomes harmful economic outcomes. If so, the outlook for 2025 and beyond is troubling

- MICHAEL R STRAIN

U.S. President Donald Trump's management of economic policy has been a disaster. Previously, it would have been unfathomable for a president—including Mr. Trump during his first term—to inflict so much harm on the economy deliberately. As alarmed as I am, though, I am not panicked. A recession remains unlikely, and equilibrating forces in the political system may soon apply the brakes to this madness.

Mr. Trump's campaign policy agenda had both pluses and minuses. While there were obvious flaws, much of what he wanted to do would have advanced prosperity. As recently as late January, I wrote that Mr. Trump seemed to be off to a good start. His approaches to AI and antitrust enforcement were promising, as were his commitments to expanding domestic energy production, eliminating harmful regulations, and cutting corporate taxes. Investors largely agreed with this assessment: The S&P 500 and the Nasdaq each hit all-time highs following Mr. Trump's election in November, and stayed high well into February.

In recent weeks, Mr. Trump has reversed that good start. I fully endorse the goals of Elon Musk's Department of Government Efficiency (DOGE) to reduce the scope of government activity and eliminate wasteful spending. But DOGE's chaos has spooked consumers and investors. Worse, Mr. Trump's on-again, off-again tariff increases and open hostility toward crucial trading partners (Canada, Mexico, and the European Union) have soured business and consumer sentiment, increased inflation expectations, chilled investment, and sent stocks plunging. On March 13, the S&P 500 sank into a correction, falling 10 per cent from its record high three weeks previously.