This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:
If all goes according to plan on “Liberation Day” — President Trump’s term for Wednesday’s scheduled reciprocal tariffs — the trade war showdown will be the starting point of a new American era, of a nationalistic economy that boosts our self-sufficiency and prosperity.
But even if every aspect of the president’s agenda falls into place, there’s a laundry list of things that will have to go right for it to work out. Things that essentially seem impossible.
First off, the countries whose imports would be tariffed need to do nothing, instead of unleashing a wave of repercussions that would nullify or complicate the imagined progress of an America First platform.
The rollout itself has to be clean, without the expected messiness of retaliatory tariffs and chaos at US ports.
The tariffs, any further tit-for-tat levies, and rollout need to be a historical economic exception that boosts growth and doesn’t end up kickstarting a brutal disruption for businesses and consumers.
Businesses need to get creative as international trade continues to be reshaped by policy and torpedoed relationships with allies and trading partners.
Consumers need to be patient, forgiving, and team players willing to make sacrifices. While the White House contends that the price increases triggered by tariffs will be fleeting, consumers have made it plain they’re fed up with inflation. Relying on a theory that tariff-inspired price increases will only be transitory — and that Americans will be willing to accept them — seems an economically and politically dangerous gamble. Consumers will improbably have to play along.
“Liberation Day” also puts the Federal Reserve in a jam. If the Fed cuts rates to reverse flagging growth — yet another “best case” scenario for Trump that isn’t ideal for the rest of us — the central bank risks driving up inflation. And those rate cuts will come in the form of a monetary rescue mission instead of a final, easing maneuver in a soft landing.
And then, all of this needs to crystalize into a sentiment, growth, and earnings boom.
That’s an incredible string of green lights the Trump administration needs to hit. Or holes-in-one; pick your metaphor. Which is why, as many economists, strategists, and analysts — people incentivized by being correct, not politically correct — have noted, the upside may be limited, but the downside is a black pit.
