Trump Hopeful for Stock Markets and Economy Despite Freefall
U.S. stocks may be in decline, but Donald Trump believes that the economy will be just fine when his economic plans are complete.
The stock market went into steep decline on Thursday after Donald Trump announced new tariffs that were higher than expected. However, Trump says that “the markets are going to boom.”
Is the U.S. President hopeful or deluded about the economy when he says it will boom as the numbers suggest otherwise? Perhaps he knows something that economists do not. When Trump declared the next step in his trade war on Wednesday with reciprocal tariffs against a number of countries, he compared the state of the economy to a patient undergoing operation.
Essentially, Trump said that even though things look bad now, when he is finished with his economic policies, the markets will boom. “The rest of the world wants to see if there is any way they can make a deal.”
Trump Chimes in for Thursday
On Thursday, after the stock market dropped precipitously, Trump said that he thinks things are going very well. This could be a case of the President trying to reassure the public despite the bad economy and stock market news, even if things are not going according to plan. However, Trump’s lengthy business background could mean that he knows exactly what he is doing.
We have not seen a drop in the stock market values like this since the Covid pandemic, and it took years for the United States to claw its way back to economic stability afterwards. The difference this time is that what is happening to the market is mostly controlled conditions.
The U.S. government can decide at any time how high it wants the tariffs to be and when it wants to cancel tariffs outright. It cannot decide, however, how high the reciprocal tariffs from other countries will be. China has promised steep tariffs to be lodged against all U.S. imports, but if the United States were to stop tariffs from its side immediately, there is a high chance that other countries will pull back on their own.
The current trade war is partly a show of power, but it is also a chance for the U.S. to recoup some of its losses and to start to pay off the enormous debts that it owes numerous countries. Currently, Japan owns the most U.S. debt at $1.1 trillion, but China is second place with $759 billion. These figures are from December of 2024, and tariffs could start to change some of that. The current U.S. government administration is focused on minimizing expenses and eliminating government waste.
If it can be successful in doing that through multi-pronged efforts like higher tariffs and the elimination of excess spending and extraneous government positions, then the U.S. will be on better financial footing at the end of the process. The questions investors are asking, though, are about how long the process will take and what kinds of suffering citizens will have to endure through the process.
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