Opinion: Trump’s two worst economic ideas collide
President Trump speaks during a trade meeting with Chinese Vice Premier Liu He in the Oval Office in April. By Catherine Rampell Catherine Rampell Columnist covering economics, public policy, politics and culture Email Bio Follow Columnist May 10 at 10:11 AM At 12:01 a.m. Friday, President Trump’s two worst economic ideas finally collided — and made each other even worse.
But none of that mattered to Trump. He has been throwing tantrums about the Fed’s modest interest rate increases, claiming that they threaten both the U.S. economy and his presidency. At one point, there were even reports that Trump was considering taking the unprecedented and cataclysmic step of firing the Fed chair whom he appointed, Jerome H. Powell.
“Why would you be constantly asking the Fed to lower rates if your economy is not turning weak,” said Mei Xinyu, an analyst at a think tank affiliated with China’s Commerce Ministry. If the U.S.’s resolve was weakening, the thinking in Beijing went, the U.S. would be more willing to cut a deal, even if Beijing hardened its positions.
Trump seems to believe that these tariffs are an end unto themselves because they are bringing “wealth” into the country by forcing China to pay “billions” into the U.S. Treasury: After all, worsening trade tensions could put the Fed in a bind. An escalation in tariffs is likely to increase uncertainty, slow down business investment and hiring, and ultimately drag on growth. But it might also raise prices, since as those studies I cited note, the cost of the tariffs so far has been passed through to U.S. consumers.
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