“Why would I want to blow up the global financial system?” an exasperated Treasury Secretary Scott Bessent said during a press conference Monday, while introducing new sanctions against Iran. Bessent may think that’s still a self-evidently ridiculous question. George W. Bush didn’t want a Great Financial Crisis, nor did Herbert Hoover seek to start a Great Depression. Surely no White House would deliberately hurt the global economy.
Yet for the first time ever, that’s not the case. At home and abroad, the past few days have laid bare the extent to which President Trump’s troubles on the economy are self-inflicted.
The Strait of Hormuz is not open, oil prices are still high, and the knock-on effects are spreading beyond the gas pump.
Last week, the yield on the 30-year Treasury bond reached a 19-year high. The administration took notice, perhaps because higher bond yields usually mean higher borrowing costs at a time when voters are already furious about the cost of living. Bessent’s solution was to intervene in bond markets by increasing the size of debt buybacks. But yields dropped for only a day before returning to their previous level, reflecting investors’ broader structural fears, including over the $40 trillion national debt.
For that, the White House can thank its own tax cuts, as well as those passed under the first Trump administration. As Bobby Kogan of the Center for American Progress wrote for MS NOW Tuesday, “it is a mathematical truth that had the [George W.] Bush and Trump tax cuts never been enacted, the U.S. debt ratio would be declining indefinitely.” Even if the deficit-busting impact of the 2017 tax cuts somehow came as a surprise to the first Trump administration, there was no way to expect any other outcome for last year’s “big, beautiful bill.”
Two days after Bessent’s bond intervention, Trump announced he will allow the import of 300,000 tons of ground beef with lower tariffs. Though he did not specify which companies or countries will provide the beef, the president promised it would “substantially lower the price of ground beef” just before the midterm elections. In other words, he admitted that U.S. consumers have been paying the costs of his tariffs after months of insisting that other countries would foot the bill. In the meantime, his failed, and in some cases illegal, trade policies have cost Americans billions.
At least on these two issues, the White House is attempting to mitigate the damage. The same cannot be said of Trump’s approach to two economic conflicts.
Trump, like many a businessman turned politician, has long presented himself as someone who gets stuff done.
The human toll of the Iran war is terrible enough: tens of thousands of Iranians and nearly 800 U.S. service members killed or wounded. With the president bored and frustrated at being unable to bomb his way to peace, the administration is betting on new sanctions – and threats of new sanctions against other countries – to secure Tehran’s capitulation. But the Strait of Hormuz is not open, oil prices are still high, and the knock-on effects are spreading beyond the gas pump. “Companies say they are raising prices on products ranging from french fries and beer to paint and packaging to offset their own rising commodity and freight costs,” the Wall Street Journal reported last month.
At the same time, the White House has restarted its trade war with Canada. The two countries announced billions in new tariffs, which will make products more expensive on both sides of the border. Though the U.S. may be far larger, as economist Paul Krugman wrote, “the U.S. economy is far more dependent on Canadian goods than most Americans realize.” For instance, Canada exports millions of barrels a day of oil to the upper Midwest and enough electricity to power some two million homes in Maine – to pick but two examples that may affect key Senate races.
Given these headwinds, it’s little surprise that retail sales fell in July for the first time in nine months as the economy also lost jobs. Again, presidents usually get far too much credit or blame for the state of the economy. But in Trump’s case, the causation is much clearer.
And it means a key part of his political image is backfiring. Trump, like many a businessman turned politician, has long presented himself as someone who gets stuff done. At the 2016 Republican convention he pledged “I alone can fix it” and he leaned even further into that image as a “man of action” in the 2024 campaign. (Remember “I will immediately bring prices down, starting on Day One”?) Now he has acted, and voters are realizing they don’t like it.
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