Does Trump have a Plan B if his tariffs plunge us into recession?

The Trump administration suffers from Munchausen syndrome by tariff, prescribing toxic cures for mythical ailments to gain attention.

That’s something to remember as Trump celebrates “Liberation Day” this week, promising to free us from the tyranny of affordable car parts, oil, produce, computers, phones, and furniture, among thousands of other products. Trump’s flighty trade guru, Peter Navarro, contends that the United States is going to raise $6 trillion in revenue via tariffs on foreign goods over the next 10 years. He also says tariffs are a “tax cut,” which makes about as much sense as former President Joe Biden telling us that dumping trillions into the economy would do wonders in fighting inflation.

Biden-era Democrats believed “transitory” inflation was worth suffering through in order to “remake” the economy. Trump officials are now making the same terrible bet on transitory economic pain.

And the “detox” era might be here soon enough. A recent CNBC survey of economists predicts that the first quarter GDP growth would fall to 0.3% from the 2.3% growth in the last quarter of 2024.  It would be the weakest quarter since the economy first emerged from the pandemic.

Goldman Sachs raised the probability of a recession from 20% to 35% this week because of the “tax-like impact on real disposable income and consumer spending from higher tariffs and their tendency to unnerve financial markets.”

Bloomberg says the S&P 500 is going to finish Q2 with the worst quarter measured against world growth since the 1980s.

For the first time in decades, stagflation is a concern.

Now, healthy skepticism about economic predictions is always warranted. They’ve been wrong many times. Voters don’t care about experts, but they do care about economic reality.

Then again, it’s impossible for a voter to keep up with the MAGA reasoning for tariffs. One day, trade wars are merely a means of finding fairness. The next day, tariffs are going to replace the income tax and build a complete “self-sufficiency” utopia where people will once again be paid big bucks for assembling widgets in factories.

Trump did promise voters he would deal with the trade deficit and stop countries from “ripping us off,” which is like accusing your local supermarket cashier of robbing you when you buy groceries. The reality is that cheaper goods from smaller economies help us elevate new industries and build wealth. But did people vote for a trade war with Canada? Trump’s needless fights with partners such as South Korea and Japan have induced them to sign a pact to promote regional trade with China. How is that good for us?

Are all international trade deals “fair?” Of course not. If things were fair in this world, we’d be in big trouble. Just look at a list of nations with high trade barriers and those without them. The ones that are low are virtually all wealthy, and vice versa.

According to protectionists like Vice President JD Vance, the public is the victim of stagnant wages and a lack of good jobs due to “deindustrialization.”  Not only is manufacturing output at historic highs right now, but real annual family income has spiked $28,000 since NAFTA was enacted, while overall wealth rose close to 500%, outpacing inflation five times over that time. The U.S. per capita income over the past 10 years is unrivaled. The middle class has only shrunk because of the growth of the upper middle class.

It is true that there are no utopias. And voters are generally sympathetic to the plight of people that creative destruction leaves behind.  Tariffs are meant to prop up a small number of antiquated union jobs in the Rust Belt at the expense of millions of others. We’re not “bringing back” manufacturing jobs lost to automation, which is most of them. And we already have plenty of high-tech, high-paying jobs. For every Rust Belt town that struggles, a new wealthy suburb in Texas, Nevada, or Florida continues to grow. Those voters may not be as accommodating to the administration if its technocratic adventures start tanking 401Ks.   

It should not be this way. Over many decades, Congress has incrementally handed over “emergency” and tariff power to the president. There’s simply no model of the constitutional order that foresaw the executive unilaterally installing economic policy or taxing citizens without legislation. Courts are constantly intervening when Trump acts in ways that fall under his executive purview. And yet, no one stops him from enacting tariffs, a clear violation of Article 1, Section 8 of the Constitution.

In a healthy republic, we would have a debate on how to implement economic policy. A federal legislature would represent the needs of its districts, states, and the country. Our relative stability relies on checks on power. In this case, the entire economy hangs onto the daily whims of one man.

Schizophrenic governance is also generally unpopular and might well catch up to the president. It’s not merely that Trump has no unifying theory on tariffs, incessantly changing his targets and keeping the market in constant flux. It’s that protectionism is also one of the most cronyistic policy ideas imaginable, spurring every industry to appease the state to get a break. 

Trump has reportedly warned carmakers not to raise prices in response to the trade war with Mexico and Canada. He now claims he “couldn’t care less” if the price of foreign car prices rises. Just imagine Joe Biden saying that about inflation. There are also reports that Trump officials have discussed “a possible farmer bailout with industry lobbying groups and Republican congressional offices” because tariffs hurt agriculture, as well. You can remember how well higher grocery prices went for the last administration.

Rather than moderate his position, numerous outlets are reporting that the White House is considering an across-the-board 20% tariff on most imports. What happens if the American economy tanks? Does Trump have a way to extricate himself from protectionist policies?

Of course, the U.S. is too wealthy to collapse over some bad economic policy. It is something of a mystery why every modern president feels impelled to remake the most prosperous and dominant economy in the world. Perhaps Trump believes the pain of tariffs is worth it in the long run. Maybe his advisers believe Republicans are going to lose in the 2026 midterm elections anyway, and the country can emerge stronger in 2028 when the tariff policy is implemented — whatever it turns out to be. Technocrats always think they can control the economy.

VOTERS ARE LOSING FAITH IN THE TRUMP ECONOMY

Still, one suspects that memories of a strong pro-COVID economy helped Trump win in 2024. That success was predicated on free market deregulation and tax cuts, not a statist remaking of the economy. Polls show around 60% of people are already concerned about how the president is handling tariffs. A recent FOX News poll found that 69 % (correctly) believe that tariffs will make products more expensive. Protectionism isn’t as popular as MAGA believes. 

And should the economy backslide into stagflation or a recession, it won’t be difficult to figure out who to blame.