Donald Trump's America: "We are witnessing blatant incompetence"

Wirtschaftswoche Donald Trump's America: "We are witnessing blatant incompetence" Strain, Michael • 1 hour • 4 minutes reading time Donald Trump's erratic economic policy is unsettling markets and consumers in the US. There are three possible explanations for his behavior. A guest article. There's no question: US President Donald Trump's economic management is a disaster. It would have been unimaginable in the past that a president—even Trump in his first term—would intentionally inflict so much damage on the economy. Now we can only hope that the balancing forces within the political system will soon curb this madness. Trump's campaign platform originally had both positive and negative aspects. While there were obvious shortcomings, much of what he wanted to do would have promoted prosperity. At the end of January, I wrote that Trump seemed to be off to a good start. His announcements on artificial intelligence and antitrust, for example, were promising, as were his pledges to expand domestic energy production, eliminate harmful regulations, and cut corporate taxes. Investors were also in good spirits: The S&P 500 and the Nasdaq reached all-time highs after Trump's election in November and remained at that level until February. In recent weeks, however, Trump has reversed this positive start. While I support the goals of Elon Musk's Department of Government Efficiency (DOGE) to cut red tape and eliminate wasteful spending, the chaos wreaked by DOGE has scared off consumers and investors. Worse still, Trump's erratic tariff policies and outright hostility toward key trading partners (Canada, Mexico, and the EU) have worsened business and consumer sentiment, raised inflation expectations, cooled investment, and caused stock prices to plummet. Why is Trump doing this? There are three possible explanations. 1. Competence First, we are witnessing blatant incompetence. As has been widely reported, DOGE people have infiltrated federal agencies and fired employees, only to rehire them days later when it was realized how critical they were. DOGE repeatedly publishes data with significant errors about "spending cuts." Clearly, there is no plan here. This group simply has no idea what it's doing, and its frenzied activity has caused nothing but confusion. And there have been no significant spending cuts: federal spending was higher in February than in any previous month. Trump's trade policy is equally incompetent. Many supporters try to discern a strategy, as if the president were playing "five-dimensional chess." But he isn't. There was no master plan behind his decision, for example, to sharply increase tariffs on Canadian goods on March 4, to exclude auto production on March 5, and then to exempt goods that comply with the existing US-Canada trade agreement. 2. Mercantilism The second explanation is that Trump is a true mercantilist who genuinely—and falsely—believes that having a bilateral trade deficit with another country is detrimental to the United States. For example, he has criticized US companies that import timber from Canada, arguing that the US has "more timber (sic) than we can ever use." He calls timber imports "subsidies." It is also astonishing how many contradictory trade policy goals the US government simultaneously pursues. At various times, the White House has argued that tariffs curb fentanyl imports and illegal immigration, provide federal revenue to finance tax cuts, and force other countries to lower their barriers to US exports. Trump's actions reflect his stance that a smaller bilateral trade deficit is a win in itself. 3. The MAGA View But there is a third, even more ominous explanation. It's possible that Trump has embraced the MAGA view that the US economy needs disruptive transformation. Asked about the damage caused by his tariffs, Trump replied in an interview on Fox Business that "the big globalists have been ripping off the United States for years." Trump used the same term to insult the staunchly pro-business Wall Street Journal: "Globalist" is a dirty word in the Make America Great Again movement. At the same time, Trump refused to rule out a recession in the US. This kind of anti-elite rhetoric and calls for economic destruction are common among MAGA figures like Steve Bannon and Vice President J.D. Vance, but unusual among Trump. It remains unclear whether he has truly converted to an ideology.