Donald Trump Miscalculates
Author: Greg Valliere
February 3, 2025
AN ENDURING THEME FOR DECADES in Washington has been politicians over-playing their hands, acting without consulting, needlessly making enemies for life. It’s happened again.
IT’S IMPOSSIBLE TO OVER-STATE the anger in Canada, which Trump considered an easy target to intimidate with tariffs, setting an example to other countries.
OUR DEAR FRIENDS IN CANADA cannot be intimidated. They are incredulous. Canadians aided California fire victims, and supported the U.S. in dozens of crises, and now they are furious.
WE THINK THIS WILL BACKFIRE ON TRUMP. Consider — 80% of Democrats oppose his tariffs, and well over 50% of Republicans agree in private. At least 90% of economists agree with the conservative Wall Street Journal, which calls this the “dumbest trade war in history.”
MOST AMERICANS DON’T UNDERSTAND arcane trade disputes, but they understand when their 401(k) accounts slide — and they definitely understand when the price of food spikes in the U.S. and Canada, which seems likely.
WHAT A GIFT FOR THE MORIBUND Democrats, who finally have an issue — a self-inflicted wound by Trump, leading to higher prices stemming from a dispute with one of the closest U.S. allies.
TRUMP THOUGHT HE COULD BULLDOZE HIS WAY to steep spending cuts (which have been rescinded), and an incredible intrusion into the Treasury Department’s inner operations (sure to be litigated). There are other targets — including Panama, which was bullied by Marco Rubio this past weekend.
THE BACKLASH HAS BEEN FURIOUS in Canada (hockey fans are booing the U.S. national anthem). Trump said this weekend that he would talk with Canadian and Mexican leaders, but the damage has been done.
THE FINANCIAL MARKETS will have to grapple with persistent uncertainty as tariff retaliation continues. But this isn’t just about trade — it’s about Trump’s desire to punish countries that have disrespected him. Yes, it’s mostly about him; Canada has virtually no fentanyl problem.
OUR BOTTOM LINE: This will produce an uproar — there’s now a very real threat of more inflation, weaker growth and a deep rift between old friends.
TRUMP HAS MISCALCULATED — even most Republicans agree — and he will have to find an exit strategy by summer as rank-and-file Republicans, already worried about the next elections, tell him to cease and desist.
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