President Trump loves the leverage that tariffs give him.  He can use them to cause countries to kneel to his wishes, punish U.S. companies if they displease him and grant exceptions to companies that stroke his ego.  And so far, he has been able to wield tariffs like the dictator he is, without needing approval from Congress.  They give him the king-like power he craves and he showed he is intoxicated with it when he caused world-wide chaos with the reciprocal tariffs he launched on “Liberation Day,” April 2.  

Then on Tuesday night, April 8, just a few hours before the reciprocal rates were to take effect, he spoke for almost two hours at a dinner held by the National Republican Congressional Committee.  As part of his remarks he proudly said that countries subject to his tariffs were “calling us up,” “Kissing my ass,” and “dying to make a deal,” according to reports on the event. 

The next day, however, Trump paused the most egregious of the tariff rates for 90 days, citing the “yippy” bond markets.  There was good reason for concern because overnight they had begun to convulse, with a sharp selloff of U.S. government bonds and the dollar.  Evidently, Treasury Sec. Scott Bessent managed to convince the president that he would be solely blamed for an impending financial disaster if he didn’t backoff the higher reciprocal tariffs. 

Still, it seems clear that Trump doesn’t understand how tariffs affect the economy since he continues to claim that they will be paid by the exporting countries and not raise prices for American consumers.  Nor does he seem to know how his tariffs are damaging investors’ confidence in dollar denominated instruments.

U.S. dollars and bonds have been treated almost like gold for decades and a safe haven for almost 60% of the emergency reserves held by foreign governments.  Typically, investors hoard these assets during troubling times when stock markets tank, which tends to lower bond rates.  But the early April 9 selloff caused a rapid increase in bond interest rates and the price of gold that panicked Bessent.  This was an indication that confidence in the United States was rapidly eroding and that interest rates could go much higher, which would make the cost of financing our already huge national debt soar out of control.

Still, Trump has left significant tariffs in place, like 10% on all imports, 145% on Chinese imports, 25% on imported cars and more, causing China to retaliate with 125% tariffs on U.S. imports. So, investors are left with some pressing questions:  Will he re-impose higher rates in July?  Will significant manufacturing return to the U.S.?  Will a recession be avoided?  Nobody knows, of course, least of all, Trump. 

Although the stock markets partially bounced back with the pause, trade war jitters caused them to seesaw on Thursday and Friday and consumer confidence has plummeted to a record low.  I believe the economy damaging uncertainly that Trump’s hip-shooting policies are causing will continue unabated and that recession chances will remain high. 

Yet, ill-conceived as they were, Trump’s tariffs are a distraction from the deep and lasting damage that he has done to America during his first 83 days in office, including to its system of justice and the rule of law.  I believe this period is the initial phase of America’s Trump-induced race to the bottom and that the worst is likely yet to come.  And two of his recent executive orders are good example of that. 

One ordered the DOJ to investigate former Homeland Security official Miles Taylor, who wrote the anonymous op-ed published by the New York Times in 2018 that was highly critical of Trump, and who later wrote a book about his experiences in Trump’s administration.  Trump said, “I think he’s guilty of treason [a capital offense].  We’ll find out.”

The other EO ordered the DOJ to investigate Trump’s first term election security director, Chris Krebs, for allegedly being part of an effort to steal the 2020 election from Trump.  What was his crime?  He repeatedly and correctly told Trump that there was no evidence of fraud in the 2020 election. 

These EOs are so outrageous and unconstitutional that I wonder if Trump has lost his mind? 

It is no secret, however, that our trading partners and allies now believe that Trump, and therefore America, cannot be trusted to abide by agreements on trade, defense or intelligence sharing and no doubt that is factor in the growing, world-wide erosion of confidence in the United States, its Treasury bonds and dollar. 

Consequently, I believe Trump administration incompetence and America First policies are causing world leaders and investors to ask a very critical question: Is the U.S. still a safe haven? 

The answer could depend on policies that Trump and the GOP-controlled Congress implement going forward.  But I have zero confidence that they know what they are doing or care who gets hurt as they push major legislation that will give huge tax breaks to the wealthy, massively cut Medicaid and increase the national debt by $5 trillion over the next decade.

Make no mistake though, the Republican Party is happy with allowing Trump to govern like a dictator.  Fortunately, I don’t think he has consolidated enough power yet to make his dictatorship permanent and we the people are not going to let him do that.