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In a recent Wall Street Journal op-ed, President Donald Trump suggested “experts” who predicted “Liberation Day” would lead to “market crashes, massive inflation and recession” throw on red baseball hats that read “TRUMP WAS RIGHT ABOUT EVERYTHING!”
It’s a bit early for the president to unfurl a “mission accomplished” banner, considering that experts turned out to be mostly right.
Perhaps Trump has forgotten that “Liberation Day” did cause the S&P 500 to plummet 274 points and the Dow to sink another 1,600 points. Over two days, the Dow dropped 4,000 points, one of the largest market crashes in history. Only after word got out that the administration was mulling over suspending the new tariff regime did the bleeding stop.
If Trump hadn’t rolled back “Liberation Day” rates, it’s not unreasonable to believe there might have been a downturn. At the time, JP Morgan put the odds of a recession at 60%.
It was the Trump administration that, prudently, panicked and rolled back “Liberation Day” rates — save the one on China, which was later settled — a mere seven days after announcing them, and six days after Commerce Secretary Howard Lutnick promised the president was never “going to back off.”
The market was in such bad shape that Trump’s social media allies began deriding people who were worried about their 401(k)s as unpatriotic. MAGA influencers who champion “bringing back” monotonous, antiquated, low-paying jobs for the proles argued that “Liberation Day” would save our very souls. Influencer Benny Johnson’s argument that “losing money costs you absolutely nothing; losing your country costs you everything,” typified the zero-sum hysterics.
Now, I strongly disagree that losing what you’ve earned, saved, and invested “costs you absolutely nothing.” It is, I’d even go as far as to argue, the definition of a “cost.” But it’s an especially odd case to make when you consider Trump incessantly brags about the performance of the stock market during his terms, including in his “Liberation Day” speech, which focused almost entirely on the alleged financial gain of tariffs.
“Jobs and factories will come roaring back into our country,” Trump promised, “and you see it happening already.” Since April 2024, manufacturing employment has dropped every month. Over 70,000 fewer people work in manufacturing today than did when he said those words.
To be fair, manufacturing jobs have largely been in decline for decades under every administration because of, among other things, technological efficiencies. But even as Trump was announcing his “Liberation Day” rates, and his lieutenants were fearmongering about “deindustrialization,” American exports were at all-time highs. We are just exceptionally productive at making high-end products.
Yet, Trump wrote in his column that we’ve “slashed our monthly trade deficit by an astonishing 77% — all with virtually no inflation, which everyone said could not be done.”
None of this is true, either. The trade deficit was around 4% higher in 2025 than in 2024. Perhaps Trump is specifically talking about October 2025, when trade deficits narrowed. But that’s tantamount to bragging about your last-place team’s best month, because in the next month, the trade deficit soared nearly 37%.
And that’s fine, because the trade deficits largely reflect our wealth and ability to buy whatever we like.
Most economists, incidentally, knew not to predict high “inflation” rates due to tariffs, a one-time price adjustment passed through to consumers. Consumer price indexes measure sustained increases. Even in that regard, the Federal Reserve targets a 2% rate. Average CPI last year was 2.7%, on top of prices that compounded over years of bad policy.
Since “Liberation Day,” the White House has often claimed that tariffs “are a tax cut for the American people.” In his recent column, Trump writes that the “Journal has charged repeatedly that tariffs are nothing but a ‘tax’ on American consumers, which has proved to be totally false!”
To prove this, Trump cites a Harvard Business School study that shows foreign producers and middlemen were eating “at least 80% of tariff costs.” Or, in other words, Trump admits he’s unilaterally slapped American consumers with at least a 20% import tax hike.
The problem, though, is that the paper the president relies on concluded that “imported goods rose roughly twice as much as domestic goods relative to pre-tariff trends” even in the short term, while tariff costs “were gradually but steadily transmitted to U.S. consumers.”
And this is the friendliest study the administration could find.
Even if tariffs weren’t a tax, Trump has yet to explain his “Liberation Day” promise that revenues would one day take the place of federal income tax and “pay down” our national debt “very quickly.” Who is paying it?
“When I imposed historic tariffs on nearly all foreign countries last April, the critics said my policies would cause a global economic meltdown,” Trump went on.
Well, averting a global economic meltdown seems the minimum we should expect from the president. That said, if we’ve learned anything from history, it’s that the U.S. economy is resilient enough to survive bad economic policy.
A counterhistory exists in which Trump didn’t institute a high import tax on American consumers, didn’t disrupt supply chains and didn’t undermine stability with his endless threats. In that reality, we may well have seen fewer layoffs, lower prices, and even more growth. Take the 25% import tax on the North American auto industry. Ford reports that it has eaten tariffs of around $1 billion in 2025, while General Motors says tariffs have cost anywhere from $3.5 to $4.5 billion. The auto industry also experienced significant job losses. How long before consumers or taxpayers foot the bill?
Which is why the president’s defenders give him a lot of credit for things he never promised and ignore the things he did. Most experts concede that there are suboptimal trade agreements. Trump, however, slapped tariffs on everything and everyone, even nations with lower reciprocal rates, even territories without inhabitants, and those who produced things we did not, such as coffee, for example.
DC’S BLIZZARD FLOP IS ANOTHER LESSON ON GOVERNMENT POWER
“Liberation Day” predictions are largely moot because “Liberation Day” policy ceased to exist. The flat 14%-17% rate Trump adopted was destructive enough. Trade policy now revolves around the daily whims of the president. Predicting what the president is going to do with any certitude is even more precarious than economic forecasting.
On the macro effects of import taxes, however, experts were proven more right than wrong — certainly more right than Trump.
