President Donald Trump is betting heavily on his ability to use the blunt instrument of tariffs to build a “golden age of America” as economic uncertainty batters the stock market.
Even Trump hesitated to rule out a recession this year as he acknowledged there would be a “period of transition” before the economic benefits of his policies are fully felt.
“What I have to do is build a strong country,” he told Fox News. “You can’t really watch the stock market.”
“There’s going to be a natural adjustment as we move away from public spending to private spending,” Treasury Secretary Scott Bessent said last week on CNBC. “The market and the economy have just become hooked and we’ve become addicted to this government spending, and there’s going to be a detox period.”
Trump has also maintained that private investment will begin to flood into the United States as companies seek to avoid the tariffs.
The economy was one of Trump’s best issues in last year’s presidential race. A period of respectable economic growth, low unemployment, and stock market gains without significant inflation appeared likely to secure him a second term in 2020 before the pandemic struck.
Last year, 53% of voters trusted Trump more than then-Vice President Kamala Harris on the economy, according to exit polls. He won 93% of the vote among those who trusted him to handle the economy and 81% among the nearly one-third of the electorate that listed this as their top issue.
More than two-thirds of voters rated the economy’s performance as not good or poor, with Trump winning 70% of their votes. Thirty-three percent said the economy was poor, and Trump received 88% of their votes.
Trump’s retroactive job approval ratings improved as voters recalled the economy of 2019, which had most of the same favorable economic conditions as prevailed under former President Joe Biden but with a roughly 20% lower cost of living. Inflation stood at about 1.4% the month Biden took office before spiking to a 41-year high in June 2022. Even with the current economic anxieties, Trump remains slightly above water in the Real Clear Politics polling average of his approval ratings.
But there are huge disparities in the polling on how voters currently feel about how Trump is handling the economy, which was once his greatest strength. A March Ipsos-Reuters poll found that just 39% approved, though most other surveys show higher numbers.
Inflation is down considerably from its peak but remains persistent. Democrats, who have been reluctant since 2016 to credit economic rationales for Trump’s appeal, have begun to focus on high prices and link them to specific Trump policies like tariffs.
“The first victims of Trump’s trade war? Minnesotans struggling to pay their skyrocketing electric bill,” Gov. Tim Walz (D-MN), Harris’s 2024 running mate, wrote on social media. “Minnesota cannot afford Trump’s billionaire-run economy. We have to put a stop to this madness.”
“Donald Trump is jacking up prices and giving tax breaks to billionaires,” Gov. Maura Healey (D-MA) said. “If Democrats want to win, we need to be focused on lowering costs and delivering for everyday Americans.”
Democrats are hoping that economic uncertainty, a possible government shutdown, European resistance to the White House’s Russia-Ukraine peace plans, and the backlash against the Department of Government Efficiency cuts will produce a series of negative headlines that will take the shine off Trump’s second term.
While Trump has signaled flexibility on Elon Musk-style budget cuts, he has long been a true believer in tariffs.
There is precedent for voters showing patience during short-term economic disruption. Ronald Reagan worked as president with then-Federal Reserve Chairman Paul Volcker, a Jimmy Carter appointee, to tame inflation. In 1982, the economy went into recession, and unemployment reached 10.8%. Republicans lost House seats in the midterm elections.
But inflation was brought back under control, and the economy soon boomed. By the fourth quarter of 1984, GDP was growing 6.8%. The Reagan tax cuts were also taking effect. The president was reelected in a 49-state landslide. Reagan lost Minnesota, his Democratic challenger’s home state, by just 0.18 points, 3,761 votes out of more than 2 million cast.
Former President Barack Obama similarly weathered lingering high unemployment as he took credit for leading the country out of the Great Recession. The unemployment rate was just under 8% when Obama was reelected in 2012.
TRUMP OFFICIALS ACKNOWLEDGE TEMPORARY PAIN AMID TARIFFS AND MARKET UNEASE
There are counterexamples, however. Then-President George H.W. Bush lost his 1992 reelection race amid a sluggish labor market thanks to a recession that had technically ended well over a year before Election Day. The Biden administration’s talk of “transitory” inflation proved illusory.
Trump benefited from Biden’s inability to feel the voters’ economic pain adequately. Now, Democrats are hoping that will be his own undoing.
