Yesterday, the news was that Trump's tariffs had been ruled to be illegal.
This morning, the news is that another court has permitted the White House to keep going with its tariff plans, until, that is, they reach the Supreme Court.
No one knows how the Supreme Court will decide on this issue; the outcome is uncertain.
These are the headlines in an FT email this morning:
The stories relate to one thing. That is profound uncertainty.
Other headlines in the same email relate to another American sentiment, which is weariness with what Trump is doing:
Trump is not Making America Great Again. He is trashing the place.
That's not just because his policies make no sense, although many of them reveal a profound incoherence at the core of what he appears to be trying to do.
Nor is it just because many will disagree with what passes for policy.
What is grinding people down are two things. One is the uncertainty. That arises because it is not at all apparent that Trump knows what he wants. It is as clear that he does not know how to get it. The departure of Musk makes that obvious. And then there is the fact that whether what Trump does is uncertain as to its legality. There have been at least 180 court orders against his actions so far, and the scale of the actions appears to be growing.
No one expects a President to act like this.
No one wants a President to act like this.
No one imagines America can be made great like this.
Chaos is not an answer to anything, and so far, that is almost all Trump has delivered.
And then there is the other concern, which is that none of this will turn out for the best. Uncertainty whilst achieving better things might be tolerable for many, although no one should underestimate people's desire for routine, and what is familiar, which is one of the main reasons why inflation is so unpopular. What is intolerable is uncertainty when it appears very likely that everything will turn out for the worst.
People in the US now know that there will be inflation.
Large parts of the country - those on middle and low incomes - know that Trump's budget plans will do nothing for them.
At the same time, they know that access to medical cover - an American obsession given its absurd private healthcare system that is designed to deny access to many without state intervention - either will not be available to them anymore, or might not be if anything goes wrong in their precarious lives.
Put those together, and hope goes out of the window.
That will be happening in the USA.
Of course, a recession is likely. It would appear almost unavoidable. In such situations, people try to save: it is the only rational reaction to the threats to their well-being that they face. It may, at a macro level, add to the gloom, but at a micro level, it makes sense. Keynes called this the paradox of thrift. The fact that most people in the States will have no choice but to face this out only makes that reaction more likely.
Three groups have a choice about what to do, though.
One group are wealthy individuals, most especially if they are linked to what Trump thinks of as the intellectual elite, who he thinks threaten him and all he is seeking to do as he tries to take the US back to somewhere in the late nineteenth century. Many of these people could leave.
The US faces a brain drain as these people quit, as I think they will. Why live in a hostile environment when you have the chance to go? There may only be a few taking this option right now. I rather strongly suspect that a great many might be considering it. The wise leave early.
The second 'group' that will leave is foreign capital. The non-US resident owners of funds currently saved in that country can smell the coffee from afar: they are getting their money out. There is a reason why the value of the US dollar is falling. Capital flight is a normal reaction to economic chaos, and if anything, the States has yet to see just how strong this trend might be. The owners of 'hot money' hate the idea of losing what they have. They hate chaos as a result. At some point, they will decide to go, for precisely that reason. Hedge funds might make money from chaos. The ultra-wealthy want stability more than. anything else. Trump is not delivering it. Instead, he and his new desire to use tax as a weapon of economic warfare against those who are not US resident will encourage this exodus.
And then, thirdly, there are US companies. I have not seen this being discussed elsewhere as yet, but something that globalisation created was the option for companies to move the jurisdictions in which they are located. The US is the location that hosts the biggest and most powerful companies in the world. A few of them support what Trump is doing. Many more will hate it.
Put bluntly, tariffs are not good for business.
Nor are the tax measures Trump is proposing, which will create ring fences within the international tax environment, good for multinational companies.
And the uncertainties in the States, and even the dollar, might make companies want to quit for calmer countries, and even currencies, where supply chain relationships might be a very great deal less fractious.
Remember that for many of these companies, the US is only a small part of their total market compared to the greater whole of the rest of the world. Isolationism, Trump style, does not pay for them.
Will US companies quit? Not yet, is my answer. But if things get worse, and the rule of law becomes more uncertain, with the risk of a US recession growing, and the dollar losing its sheen? Then, I think the temptation to go might be very strong indeed.
Who will go? Bizarrely, big tech might be at the forefront, with pharmaceuticals next in line. These might be US-based, but they are a long way from being US companies. They really are global. Trump is making the US a hostile environment for them, just as he is for everyone else. And they might go.
I cannot be alone in remembering the Sun headline that once asked the last person to quit the UK to turn off the lights. The same might happen with US corporations. Might the last to leave turn off the US influence on the global economy? It's a prospect that Trump is creating.
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The latest on Farage is that he is now talking in terms of legitimising bitcoin – yet another aping of Trump and another bold and worrying step alongside his recent pronouncements about the two child cap etc.
The problem will be convincing people in the UK of the Trumpian downsides to Farage’s shadowing of Trumps moves. He’s promising more of what people need – money – through the worst possible route ever.
Not only is this outrageous, but it is nothing but cruel and exploiting the hopes and fears of your neighbours and friends. Pity them I say.
We seem to me to be entering a political and economic black hole that is getting wider.
In the meantime I see Starmer shaking hands with someone who is associated with authorising a murder.
I hope Starmer did not get invited to stay for dinner or noted any bin bags hanging around.
Its easy to see a situation in which enough of the best go to make a life elsewhere, Companies dont invest in the US, people prefer to make new bond purchases elsewhere etc.
Not necessarily dramatic but enough to ‘blunt’ the US economically and culturally
This has all been coming for a long time. I was brought up in the late 50s and 60s to believe that America was what we should be modelling ourselves on.
I didn’t and don’t want to live in a country where government policy is dictated by corporations and where there are more guns than people.
I wish we had stayed closer to Europe and let the ‘special relationship’ wither.
I went on a one month ‘executive education’ course at Northwestern in Chicago in 1987, my first visit to the US. The 1987 crash happened in the middle of the course.
One lesson was that I had far more in common with the non-Americans on the course (about 10 out of 60) than I did with the Americans. Germans, Belgian, Mexican, South African (black), Irish, British, Australian – we naturally gravitated together. Even though these were middle-senior managers from America, they were obviously naive about the world in general.
The second lesson, when the crash happened and the Americans all went into a complete panic, was that all that Chicago economics and touching faith in the markets was rubbish. As someone asked one of the professors, explain why IBM is worth 2/3 today Monday, of what it was worth on the previous Friday! Surprisingly, they were unable to answer the question. It was the foreigners challenging the academics, not the Americans.
Have been back many times, but my basic opinion has not changed
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Who will quit the USA? The pessimists will quit the USA.
In Germany in the 1930s, as the Nazis came to power, it was said of the Jewish population that the pessimists went to the USA while the optimists went to Auschwitz.
Given the uncertainly that you point to, those who fear a bad outcome will get out, others might find theyâve left it too late.
In an episode of âDead Ringersâ on Radio 4 way back, just after Trump was first elected, they imagined the 2020 election. In it, one of Trumpâs policies was to build his wall even higher â to keep IN those Americans trying to flee to the paradise of Mexico!
Correct
This is more like the true Fa***e, the ex-City metals trader, now touting cryptocurrency on yet another of his foreign junkets, the Clacton MP who seems to go abroad more often than the Foreign Secretary.
https://www.theguardian.com/politics/2025/may/29/reform-uk-to-accept-donations-via-bitcoin-nigel-farage-says
Will the Reform grifter now ask to pay for his British pints in dark money?
This is definitely one for the omnibus – reduced CGT (down from 24% to 10%) on cryptocurrency gains. A digital crypto-reserve at the BoE! My fellow omnibus passengers have been yelling for that for years; forget social care and the NHS, “We want crypto! When do we want it? NOW!” they cry, as they queue at the foodbank.
Ask your Reform-tempted relatives about this one, it should prompt some interesting coversations.
đ
“But if things get worse, and the rule of law becomes more uncertain …”
FWIW I think this is absolutely key. For many issues, people and companies can try to mitigate, hold out in the hope that it’s only temporary; keep heads down and hope for the best. So, more savings, don’t risk investment, protect and survive. None of which is good for the wider economy of course.
But the moment people don’t feel protected by the legal infrastructure they lose confidence in being able to mitigate. At the moment – and as usual – it’s the vulnerable who are immediately threatened (by arbitrary arrest and deportation, for example) but the effects are spreading. Companies that risk confronting Trump must be reflecting on just how secure they are.
Fear of economic uncertainty is powerful but loss of confidence in the legal infrastructure could be a tipping point.
Meanwhile, Trumpâs ludicrously named â Big, beautiful billâ omnibus legislation- if it passes the Republican controlled Senate- seeks to erode the power of the judiciary to ensure the Presidency abides by the law. This is a highly insidious development for American democracy!
OT and flippant, I know, but wouldnât big beautiful Bill make a great name for an anti-Trump comedian?
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On this subject, did you know that to get this decision from the Appeals Court, Trumps lawyers had to promise (in writing) to issue refunds for charging the tariffs if he loses the case when it goes to the Supreme Court?
See the latest report from Lawrence O’Donnell: https://www.msnbc.com/the-last-word/watch/lawrence-irreversibly-stupid-trump-s-biggest-tariff-humiliation-day-has-yet-to-come-240575045684
Oh, very nice….
I’m afraid that this ‘concession’ makes me think that the fix is already in, so to speak.
SCOTUS was forcefully stacked with conservative, mostly unashamedly Republican judges, in Trump’s first term. We’ve since seen some utterly illogical rulings, which just so happen to go in favour of the line taken by the US right-wing groups.
I suspect they already know that SCOTUS will find some obscure way to rule that Trump has complete purview over tarrifs, the constitution be damned.
The alternative, of course, is that the administration just ignores any SCOTUS ruling which goes against them in this regard. They are endlessly complaining about ‘activist judges’ interfering and it doesn’t seem likely that Congress would do their duty and impeach Trump if he simply continues to ignore the rule of law altogether. The GOP are bought and sold already or too self-interested and don’t want to be ‘primaried’ if they go against the wishes of their Dear Leader.
Hi Richard,
I would point you at your mate Prof Steve Keen on Tariffs and say he agrees how Tump is applying tariffs is ludicrous, but he is correct in saying being the worlds reserve currency has forced the US into the state they’re in now. You should chat to Steve on this and ask him about his prediction on the death of neoliberalism and capitalism within 5- 25 years and the move to a command economy or anarchy which is what I gather from this, https://www.youtube.com/watch?v=j_v1zVsYLy4&ab_channel=1DimeRadio , you’re right this is scary stuff for you young uns me an old sickie unlikely to see it.
Steve has mentioned we should do another podcast