President Trump Is Doing Several Things That Strike Me As Unwise

The trade war, an indiscriminate effort to shrink the federal workforce, and the haphazard stoppage of duly-appropriated payments are likely to hurt the US economically and the president politically.

Dear readers,

The tariffs President Trump announced this weekend are really big — as Michael Strain of the American Enterprise Institute notes, they appear likely to affect $1.4 trillion worth of trade, about four times the size of all the tariffs he imposed gradually over the course of his last four years in office. They will also apply mostly to imports from Canada and Mexico, whose economies are more integrated with ours than with the primary tariff target last time around, China. These tariffs will increase costs for American consumers; they will also disrupt supply chains, hurting American manufacturers who rely on Canadian and Mexican components — a particular problem in the auto industry.

A year ago, Scott Bessent — then an investment manager and now the Treasury Secretary — wrote that he didn’t think Trump would do this.

“Tariffs are inflationary and would strengthen the dollar,” he wrote, accurately, in a note to investors. The “strengthen the dollar” part is important because a stronger dollar makes it cheaper for Americans to import goods and more expensive for foreigners to buy our exports. This means tariffs are not straightforwardly like sales taxes on American consumers — with a stronger dollar, the pre-tariff price of Canadian and Mexican goods will go down, offsetting a significant part of the U.S. consumer burden from the tariff itself — but it also undermines the effectiveness of tariffs as a tool to reduce the trade deficit. As Bessent wrote a year ago, if Trump wants to reduce the trade deficit and encourage U.S. manufacturing, he needs to pursue a weak dollar, not a strong one — and, Bessent said, that’s what he expected Trump would do instead of major tariffs.

Clearly, Trump is not taking his trade cues from Bessent so far.

WASHINGTON, DC - JANUARY 30: U.S. President Donald Trump calls on reporters during a press conference about the collision of an American Airlines flight with a military Black Hawk helicopter near Ronald Reagan National Airport, in the Brady Press Briefing Room at the White House on January 30, 2025 in Washington, DC. Officials believe that all 64 people on the commercial jet and the three service members on the U.S. Army helicopter died when they collided midair and crashed into the Potomac River airport outside Washington, D.C. on Wednesday. (Photo by Chip Somodevilla/Getty Images)

During Trump’s last term, there were a lot of warnings that tariffs were taxes on U.S. consumers, which would hurt the economy and cause him political pain. That didn’t really come true because the tariffs weren’t that large, a stronger dollar shifted the economic burden of the tariffs away from U.S. consumers, and economic performance was otherwise strong — unemployment was low and inflation was modest and consumers were happy. Now we will see if this time is different, with tariffs that are bigger and designed to be more disruptive, coming in an environment where inflation is already modestly above target and tight market conditions make the economy more susceptible to inflationary pressure than was true circa 2018. Plus, the Trump administration is poised to pursue other policies that will tend to raise costs — most notably, immigration policies that aim to remove millions of lower-skilled workers from the labor force, creating worker shortages and pushing up labor costs.

Of course, the Trump team would say that these are their explicit policy goals: to reserve American jobs for Americans and see to it that products for Americans are made in America, and thereby make it easier for American workers to earn a decent wage. That’s fair enough, but wages are a component of the cost of goods and services, and you can ask the Biden team how it works out politically when you have a suite of policies that push up wages and prices together (people get much more upset about the rising prices than pleased about the rising wages). So my guess is that this time the tariff experience will be different from the first Trump administration: The tariffs will have identifiable and negative effects on consumers, who will be mad.

That’s one politically hazardous move the president is making. Another is his effort (apparently spearheaded by Elon Musk) to shrink the federal workforce.

The Office of Personal Management has sent an offer en masse to federal employees, generally proposing that they can continue to collect their paychecks through September 30 if they agree to resign now. The offer mirrors a move Musk made when he acquired Twitter: offer a mass buyout to get staffers who aren’t aligned with the organization’s new mission to leave while sharply reducing headcount overall. The political hazard here depends on how many workers take up the offer, on how serious Trump’s team is about accepting the resignations of all the workers who offer them, and on the other steps they may take to separate employees who don’t voluntarily resign.

The primary problem with this effort to cut headcount is its apparent haphazard nature — even if the federal government is overstaffed in the aggregate, that doesn’t mean a lower headcount is a good idea in every office of every agency, or that the workers who are inclined to accept a buyout are the ones you actually want to leave. And it doesn’t appear that Trump’s team thought very deeply about this. For example, they sent the resignation offer to air traffic controllers, even though air traffic control has been chronically understaffed for years.¹ Someone in Trumpworld seems to have realized this was unwise — on Friday, an OPM official told ABC News that controllers are not eligible for the resignation offer after all. But there are other parts of the government where indiscriminate reductions in workforce are likely to deteriorate service in ways that are noticeable to voters — who knows what effect the policy might have on IRS phone hold times, or passport processing times, or the availability of National Park Service facilities, or VA medical services?²

At Twitter, I think Musk turned out to be correct that the company was significantly overstaffed. But the staff cuts had impacts — there initially seemed to be an uptick in service outages, customer service has gotten worse (good luck getting your account back if it’s hacked), and the teams that once brought in revenue for the company have atrophied. And Twitter is not a great analogue for the federal government — it’s a much smaller and more nimble organization that could (and did) staff back up in areas where it proved necessary. Whereas if this slash-and-burn effort undermines the functioning of public-facing arms of the federal government, it will be difficult to reverse the cuts and staff back up quickly.

Trump’s third big political gamble was his move (rescinded, for now) to pause an immense variety of duly-authorized spending programs through administrative action from the Office of Management and Budget. OMB’s action threatened to disrupt a wide variety of services that ordinary Americans rely on, from Medicaid to Meals on Wheels, and created great confusion about which federal spending was actually supposed to be paused. After bipartisan outrage, the White House insisted that the OMB memo establishing the policy had been misinterpreted all along (in some cases through “malicious compliance,” the buzzword Republicans are now using whenever the government they run does something that turns out to be unpopular) and was only supposed to narrowly address certain funding related to DEI and climate activities. Regardless, it’s clear that certain key Trump officials, including OMB director designee Russ Vought, intend to attempt to assert a very broad presidential authority to disregard congressional appropriations. I believe their constitutional theory underlying this assertion is incorrect — the Constitution is clear that Congress has the power of the purse and can dictate how to spend — and I expect these efforts to be blocked in the courts. But along the way, if Trump disrupts widely-used programs that people care about, that too will be unpopular.

The vice president is out there saying the president is simply doing what he told voters he would do, and that this is democracy in action. I think that’s partly true: Trump was very clear with voters that he intended to crack down on immigration and impose high tariffs. (Some of Trump’s supporters in the business community believed Trump was just bluffing about the tariffs, but you can’t say they weren’t warned.) The stuff about letting Elon Musk find ways to get rid of lots of federal employees — that I don’t believe was so clearly ratified by the electorate, but voters will only care a lot if it disrupts or breaks the federal services they rely on, which it might or might not.

But the other thing about this being democracy in action is that Trump will own the consequences of his actions, and then some.

As this chaos has ensued, I think Democrats have been a little too worried about how to message against Trump’s actions, at least the ones that affect the economy. If anything, voters tend to ascribe too much credit and blame for economic conditions to the president. The high-profile imposition of tariffs not only threatens to raise consumer prices —including for gasoline, the most politically salient consumer price of all — it also threatens to create a narrative for how higher consumer prices are Trump’s fault even when they don’t arise directly from the tariffs. Similarly, mucking around with the federal workforce will open Trump up to more blame for the malfunctioning of the federal government — I don’t think anyone but the rankest partisans blame him for a plane crash that happened a week and a half into this term, but if we see FAA and TSA staffing problems causing trouble at airports this summer, Trump can expect political blame.

There’s a reason the most popular governors tend to be the ones who don’t do a lot — voters love a Charlie Baker or a Larry Hogan who presides over a state’s bureaucracy and declines to add new liberal programs but otherwise doesn’t change much. Today, Trump is out there ostentatiously moving everyone’s cheese — in some cases in ways he clearly cares a lot about personally (tariffs and immigration) and in others where he probably doesn’t (staffing and grants). The moves he’s making in these areas are rash and amateurish, they’re likely to cause problems, and he’s doing them in a way that’s likely to get him the maximum amount of blame for what ensues.³ So I don’t think Democrats need to worry about how to talk about it — they can just wait for these things to happen and point them out.

Or, maybe these policies will all work out fine. In that case, Trump will be popular and deserve to be. But I’m not betting on it.

Very seriously,

Josh

1. The problems caused by understaffing vary by region — in particular, United Airlines has been having problems with chronic cancellations at its Newark hub because the Federal Aviation Administration is frequently unable to fully staff the control center that serves Newark.

2. The Trump administration has rhetorically tied the resignation offer to its intention to revoke work-from-home policies and bring federal workers back into the office. The implication is that some workers will decide to resign rather than go back to work in person. But the resignation offer is also being extended to workers who never worked from home, which explains how it landed in the inboxes of air traffic controllers. So I would not assume that, for example, park rangers will be deemed ineligible just because they’ve always been working in-person. Meanwhile, the VA has not yet given guidance on which of its workers will be excluded from the deferred resignation program, but the department does not appear to be entirely exempt.

3. One of Joe Biden’s top political mistakes was his failure to prioritize the demands of his coalition, choosing agenda items based on their importance and popularity rather than trying to do everything. Trump is, in his own chaotic way, speed-running that error. And while Democrats mistakenly thought more is more — that trying to do everything gives everyone something to be happy about — what they found was that more is less: that even if most people don’t care about most agenda items, the more you try to do, the more opportunities you offer for people to get upset. I don’t believe that most voters care about USAID (or even know what it is) but some of them do, and so do some Republican elected officials. In some cases — as happened with the OMB spending freeze memo — so many Republicans will be alarmed that the administration will feel the need to backtrack. But the overall strategy of trying to do so much so quickly strikes me as likely to splinter Trump’s coalition at a time when he needs to hold every single Republican together to pass a fiscal agenda. I just don’t think it’s going to work out for him.