Economists could have predicted that President Donald Trump’s tariffs would raise prices for ordinary Americans, but they never could have imagined Trump would double down on them even as markets crashed around him, according to the hosts of Pod Save America.
Since early February, Trump has gone back and forth about whether he will fulfill his campaign promise to hit products from Canada and Mexico with steep tariffs, an import tax paid by American companies that is usually passed along to customers.
During the election, the Obama aides turned podcasters debated how much Democrats should focus on the proposed tariffs, which host Jon Favreau said are the functional equivalent of a sales tax. Now, Favreau and his co-hosts don’t think it would have mattered either way.
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“Even if Kamala Harris had doubled down and talked about it every single day and ran ads about it, I think it might not have landed the way it is now,” Favreau said during Friday’s episode. “Because no one would believe that Donald Trump is f---ing crazy enough to have done this.”
After Trump was elected in November, the dollar surged and stock markets hit record highs as investors predicted stronger growth, less regulation and lower taxes. But less than a month after Trump took office, corporate America was already souring on Trump over concerns about his tariffs and immigration policy, the Financial Times reported.
After he announced a new wave of tariffs on European products on Thursday, the S&P 500 fell 1.4 percent and closed in correction territory, while the Nasdaq 100 dropped 1.9 percent and the Dow slid 1.3 percent. Business leaders have implored the president to walk back his policies.
“When he got the reaction he did—not just from the markets, but from companies, from other countries—he just continued to do it and then go back and forth. So maybe it wouldn’t have been as believable as it should have been,” Favreau said.
The market volatility combined with rising prices and low consumer confidence has investors worried about a potential recession.
“With hindsight we did not appreciate the nature of what the administration was going to be like,” one banker told the Financial Times in February. “I do believe they are hurting their stated objectives of peace and prosperity.”
Investors were particularly shocked when Trump imposed tariffs on allies, not just adversaries, the Times reported. Even his falling approval ratings haven’t been enough to reign him in.
All those business and tech people who “cuddled up to Trump” did so thinking one of two things, Pod co-host Dan Pfeiffer said.
“One, he would never actually do it, it was just a negotiating tactic. Or, if he did actually do it and the markets reacted negatively, he would back off. And instead, he has doubled and tripled and quadrupled down,” he said.
Now, Trump is saying there will short-term pain and adjustment, but that in the long-term it will all be worth it because it will revive American manufacturing.
But during his joint address to Congress earlier this month, Trump announced he wanted to repeal the CHIPS Act, a bipartisan bill bringing semiconductor manufacturing to the U.S. His government cost-cutting task force DOGE is also trying to cut the Inflation Reduction Act, which invested in domestic manufacturing for solar panels, batteries, and other green technologies and materials, Pfeiffer pointed out.
“The president has no idea,” he said. “He doesn’t understand policy at all. And he clearly has some sort of fleeting relationship with reality.”
