Congressional Republicans, the business community, investors, and retirees watching their 401(k)s take a pounding through drops in the stock market are all nervous about the tariffs. Trump has even coined a word to describe such people: “panicans.”
“This is not what we voted for,” billionaire investor Bill Ackman, who endorsed Trump in last year’s presidential race, wrote.
Many Republicans on Capitol Hill have faith in Trump’s business acumen and his ability to get himself out of seemingly insurmountable political jams. But relatively few of them completely buy into his trade policy vision. And even some who are broadly sympathetic to what Trump is trying to accomplish with his tariffs fear that both the implementation and messaging have been too erratic.
On Monday, the S&P closed down 0.2% as the Dow Jones Industrial average fell 0.9%, or 350 points. The Nasdaq ended the day up 0.1%, as the chipmaker Nvidia rallied.
The Trump tariffs generally do not poll well. They have in some cases detracted from his overall approval ratings, perceptions of his handling of the economy, and views on how he is doing in the fight against inflation. The economy has long been a source of political strength for Trump, with the single significant exception being the mostly lockdown-induced downturn during the pandemic, and inflation under former President Joe Biden contributed massively to his November win.
Renegotiating trade deals with dozens of countries will take time. Shifting production to the United States and reshoring American manufacturing jobs could take longer. The unpredictability of the tariffs regime could also limit the amount of investment it can drive in the short-to-medium term.
If the markets don’t soon rebound and Trump’s erstwhile supporters in the business community remain bearish on the tariffs, it raises questions about whether the policy can remain intact long enough to work (if it can, in fact, work).
The first problem for Trump will be preventing the fracturing of his party. So far, he has done a much better job herding elephants than in his first term. Trump helped avert a protracted speakership fight and a government shutdown while working with a razor-thin House majority. He has generally been able to keep the 53-47 Republican Senate majority in his corner, with only a handful of regular dissenters.
Trump’s power to impose these tariffs unilaterally has been delegated by Congress and could presumably be taken away. So far, only four Republican senators have been willing to vote with the Democrats to revoke the emergency granting this authority. A second bill trying to claw back tariff powers has seven Republican co-sponsors, though the current Republican leadership team has been dismissive of it.
But if economic anxieties linger while next year’s midterm elections draw closer, it is possible that this number will grow over time.
Most Republicans want to give Trump time, but barring obvious progress in either trade negotiations or some obvious rebuilding of the industrial base, they won’t be patient forever.
Even if there aren’t enough Republicans willing to defy Trump by taking away his tariffs power, renewed divisions within the party could show up elsewhere. A lot of GOP unity will be required to extend the Trump tax cuts and enact parts of his agenda that can’t be meaningfully advanced by executive action.
Tax cuts and deregulation could soften the tariffs’ blow domestically. They are also policy areas where Republicans are in broad agreement.
There is, however, a risk that the backlash against the tariffs could weaken Trump politically across the board. Republicans lost an off-year election in Wisconsin and underperformed in a pair of them in Florida, with Democratic turnout high in all three. GOP control of the House looks precarious.
Trump is sure to be as tough in the face of domestic political opposition as he will be in international trade negotiations. Tariffs are a conviction issue for him. He has been publicly espousing economic nationalism since the 1980s, dating as far back as the Republican Party’s onetime consensus in favor of free trade.
TRUMP BETS HIS PRESIDENCY ON TARIFFS
“No other president would be willing to do what I am doing or even go through it,” Trump said at the White House on Monday. “I don’t mind because I see the end goal.”
The same can’t be said for everyone who voted for him late last year.
