White House economist Peter Navarro, whose boss claimed credit when the stock market was rising, now thinks it should be ignored. After Monday's plunge, he said, "The market is reacting in a way which does not comport with the ... unbelievable strength in President Trump's economy." Rest easy, Navarro advised. "The economy is as strong as an ox."
He should hope so, because its burdens are growing. Donald Trump's trade salvos against China moved Beijing to slap new tariffs on U.S. products. He has threatened to end NAFTA, which would wreck the supply chains of U.S. manufacturers and deprive farmers of vital markets. He's itching for a full-scale trade war, and he's likely to get it.
The tycoon who raised high hopes in the corporate sector has revealed a powerful anti-business streak. Get on his bad side and you may kiss your profits goodbye. He's a perpetual danger to every company in America.
Trump's Justice Department filed an antitrust suit to stop a merger of AT&T and Time Warner—owner of CNN, a Trump punching bag—surprising experts, most of whom see no threat to competition in the deal. He urges higher postal rates for Amazon because it has the same owner as The Washington Post, whose coverage often infuriates him.
The administration's effort to block travel from several predominantly Muslim countries brought a lawsuit from some 160 tech firms warning it would impose "substantial harm on U.S. companies, their employees, and the entire economy." His crackdown on undocumented immigrants disrupts agriculture because, as the American Farm Bureau Federation notes, "50-70 percent of farm laborers in the country today are unauthorized."
Trump threatened retribution against Ford and General Motors to discourage production in Mexico. When Merck CEO Kenneth Frazier resigned from Trump's manufacturing council to protest his comments on Charlottesville, the president took to Twitter to demand that he "LOWER RIPOFF DRUG PRICES!"
Republicans regularly depicted Barack Obama as a socialist. In 2010, the head of the Business Roundtable, an organization of corporate CEOs, accused him of "doing long-term damage to growth" by creating "an increasingly hostile environment for investment and job creation."
Hostile? Obama never denounced an American company with anything close to the menace Trump routinely exhibits. Business somehow prospered during his presidency. Corporate profits grew by 57 percent, and the Standard & Poor's 500 stock index rose by 166 percent.
Obama drew criticism for imposing more regulations on business, boosting the top income tax rate, overhauling health insurance, and running big budget deficits. These changes raised doubts about the future that weighed on the economy.
Economists Steven Davis (University of Chicago), Scott Baker (Northwestern), and Nicholas Bloom (Stanford) attributed weak growth and job creation to "extreme uncertainty" that Obama helped to create through "harmful rhetorical attacks on business and 'millionaires,' failure to tackle entitlement reforms and fiscal imbalances, and political brinkmanship."
Hmm. Does that sound like anyone else? Trump has also attacked businesses, failed to curb entitlements, and, through tax cuts and spending bills, created ever-growing fiscal imbalances.
According to the index these economists devised, economic policy uncertainty was greater in Trump's first 13 months than in the same period under Obama—and bigger than the average for all of Obama's tenure. And things are only getting worse.
Obama took the view that the private economy needed extensive regulation to avert assorted perceived harms, which didn't make him popular among capitalists. But he didn't make a habit of bullying corporations to make particular business decisions or demonizing executives who disagreed with him. Trump's idea of a good economy is one in which every company does his bidding—because they are all afraid not to.
His unpredictability breeds anxiety, not confidence. He often sows confusion that makes bad policies even worse.
Davis cites the steel and aluminum tariffs, which Trump first said would apply to all countries, then revised to exempt Canada and Mexico, and then modified to spare several other countries—but only till May 1, when all bets are off. The haphazard approach "causes businesses to step back and wait," says Davis, "and creates a free-for-all among lobbyists, which creates its own uncertainty."
Trump was supposed to understand the needs of American businesses. But he thinks their main function is to serve his needs. Navarro has a point in comparing the economy to an ox, because the president is treating it like a beast of burden.