Guest Column: The Trump Slump Started on 'Liberation Day'

It's not too late to avoid this self-inflicted harm if the President or Congress acts now to restore economic sanity to our international trading and financial markets.

President Donald J. Trump extolls the virtues of tariffs — which he calls a beautiful word — as the remedy for most of the economic challenges we face today. Tariffs are Trump’s go to, economic cure-all. Unfortunately, his tariffs are grounded in his unorthodox, 19th century view of a world that no longer exists. He refuses to acknowledge the role and benefits of free markets and fair trade to the United States in a global economy. Isolationism and protectionism are failed policies as we know from our history.

Sadly, Trump also ignores the real impact of his ill-conceived tariffs on everyone’s personal economic wellbeing and job security. His supporters blindly accepted his campaign bluster and false rhetoric without considering the negative consequences to themselves. Trump promised them a golden age under his rule, not one of global trade wars, shortages and empty shelves, and looming austerity for Americans. We are going to pay the price, literally, for Trump’s bumbling but dangerous intrusion into markets with his misguided tariffs that will wreck our economy.

The Trump Slump began on April 2, with his self-proclaimed “Liberation Day” announcing his new reciprocal tariffs. Tragically, the only thing Trump is liberating is money from consumers and businesses. Every American will be forced to pay more for the many goods they buy from overseas. As a bonus, the price of domestically made products will rise as well.

Trump’s tariffs are a regressive tax on imports purchased by consumers. During the campaign, Trump repeatedly proclaimed tariffs are paid by exporting countries like China, but he is wrong. Most of the media allowed him to get away with making that false statement.

Importers pay tariffs on products when they enter our country through customs. Tariffs are paid to the U.S. Treasury. Then, if importers can’t absorb the cost of the tariffs which most importers can’t or won’t – they pass the cost of that import tax on them to the ultimate consumer at the final point of sale. It’s a hidden, inflationary tax on consumers that is not itemized on their sales receipt like local sales tax.

Amazon tried to let its customers know what the additional cost of tariffs would be to them, until it was directly threatened by the President with repercussions and retribution. Such threats by a sitting President to a commercial firm for what it decides to disclose to its customers as part of its value proposition is reprehensible and just another reminder of the Administration’s drift into authoritarianism.

Trump’s tariffs are not just another unnecessary government intrusion into the marketplace, which Republicans used to protest vigorously during the days of President Confidential Draft May 7, 2025 Ronald Reagan and George H.W. Bush, when I served at the U.S. Department of the Treasury. In a fragile economy like the one we are in now, his tariffs could easily lead to recession and lost jobs or even worse, depression, as we learn from history of the 1930s after the enactment of the Tariff Act of 1930 (Smoot-Hawley tariffs).

Daily news headlines are a reminder that Trump’s tariffs are leading us into a global trade in real time. Trump conveniently fails to mention that fact as he constantly reverses course and contradicts himself. One day he muses that he’s conducting 100 different trade deals, the next he says the United States doesn’t need a trade deal. We are seeing the negative signs and financial consequences of his actions, not only from countries such as China, but also our former allies and trading partners like Canada, Mexico, Japan, the United Kingdom, European nations, and others who are understandably retaliating in their own economic self-defense.

Global trade wars quickly spiral out of control. No nation wins a trade war. None. In a trade war, the losers are the citizens of every nation who pay higher prices, lose their jobs, lose export opportunities when foreign nations retaliate, and see the destruction of their personal savings and wealth as stock markets crash and financial markets gyrate under the drag and uncertainty of tariffs on economic growth and future investment.

Put bluntly, by now it should be obvious to everyone that there is only one person responsible and one person alone who worships at the altar of a failed economic policy and made it the gemstone of his Presidential campaign. That person is Donald J. Trump, who will be remembered by historians as the one who needlessly harmed an otherwise mostly sound economy through his higher consumer taxes called tariffs.

If the President wants to avoid a devastating economic slump and a market crash to which his name is attached, then he should reverse course immediately. Instead of adding higher tariffs that won’t lead to more manufacturing jobs or a U.S. investment boom as he wrongly thinks, he should stop them before it’s too late and reverse course. He can rescind his so called “beautiful” tariffs tomorrow by Executive Order and stop the further slide into economic chaos here and around the world.

To save face and take the high road, Trump should take a cue from President Reagan by suspending all his new tariffs, returning to the status quo the day before he took office, and then launch a new round of trade negotiations with our trading partners to reduce current global tensions and geopolitical risk to the United States. His goal should be to reduce tariffs across the board and get all governments out of the business of senseless market intervention and retaliation.

And if Trump won’t halt and reverse his tariffs, then Congress needs to intervene immediately to reclaim its Constitutional authority over tariffs, starting by revoking his authority to launch a global trade war without Congressional pre-approval, especially Confidential Draft May 7, 2025 when we are not in a state of war. The President invoked a law, the International Emergency Economic Powers Act, to impose his tariffs, but that law was never intended to be used to impose blanket tariffs on all friendly nations. Once again, Trump acted illegally according to many respected observers.

Trump’s “Liberation Day” with more and higher tariffs marks the start of the Trump Slump at the expense of every consumer paying higher prices. And for what? Just to appease a mercurial President who has no real economic policy or thoughtful, deliberative decision-making process that involves strategic planning or even rudimentary cost-benefit analysis? His tariff policies make no sense in the modern global trading world.

President Trump’s fragile ego may not allow him to reverse course and demonstrate that he could be viewed as a strong leader by admitting his mistakes to avoid economic disaster. But if Trump does not do so quickly, then his economic failure will lead to his political downfall and personal disgrace. He will be found guilty in the court of public opinion for causing inflation, recession, lost jobs, and global trade wars as a direct result of his nonsensical tariffs. He will have no one to blame but himself.

Voters will blame him and his fellow Republican supporters in Congress, just as they blamed Republicans in the 1930s. After the Smoot-Hawley tariffs, Republicans lost 52 seats in the House of Representatives in 1930 and 101 more in 1932. Let the buyer beware of the likely political fallout.

It’s getting late, but it’s still not too late to avoid the self-inflicted Trump Slump, if the President or Congress acts now to restore economic sanity to our international trading and financial markets.

Wilson is a former Deputy Assistant Secretary, U.S. Department of the Treasury (1986-1989)