The color red splashed across every news channel yesterday, as Donald Trump’s seemingly blasé attitude towards a possible recession wiped $4 trillion off the United States’s stock market. All day and all night, the airwaves were dominated by talk and speculation over the future of the US economy, as the President pushes forward (and pulls back) certain parts of his tariff agenda.
It’s the sheer uncertainty that has investors spooked, leading to one of the worst days on Wall Street in years. The details of this “period of transition” for the economy that the President alluded to are so vague, and so unclear, that you can make of the comments almost whatever you want. Trump loyalists are insisting this means a full package of tax cuts for workers, incentives for businesses to invest, a bonfire of red tape and some marginal levies on foreign goods. His sceptics fear a full-blown trade war and another round of inflationary pressures as the cost of goods increase. That two wildly different scenarios can be extrapolated from the President’s comments isn’t doing much to ease market concern.
There was a small, curious break from the tariff talk yesterday. Fox Business, which has been providing wall-to-wall coverage of the stock slumps, bagged an exclusive interview with Elon Musk to talk about another part of Trump’s economic agenda: auditing the federal government and eliminating waste.
Speaking to Larry Kudlow, the network’s star host and former aide to Trump in his first administration, Musk provided an update on his Department of Government Efficiency—a project that still has the full support of the President, he said, not least because the many layers of government that sit under elected officials “try their best to thwart presidential policy.”
“The bureaucracy is in control,” Musk told Kudlow. And politicians “are not.” It was a compelling—and popular—case for his project. But having been bookended on both sides by coverage of plummeting stocks and recession fears, it was glaringly obvious that the topic of tariffs was being actively avoided by both parties in the interview: so much so, that an early question about Tesla’s stock value (down 15 per cent) was framed solely as the result of a boycott and attack from the left. That the other “Magnificent Seven” tech stocks have also taken up to a 5 per cent hit was a relevant factor left out of the discussion.
Tariffs are not Musk’s remit, and were he asked about his thoughts on import taxes, the Tesla CEO and X owner would be well in his right to decline comment. But voter ID laws, birth rate incentives, and criminal justice reform in Britain aren’t in his remit either, and still the DoGE leader never shies away from an opinion.
It is clear that tariffs are a source of contention, not least because Musk identifies as a libertarian and has a long history of supporting a free market agenda. This isn’t just a divide in MAGA’s inner circle, but across Trump’s wide coalition of voters. While the general view of the last election—that Trump won over the working lower-to-middle class American voter, while Kamala Harris won the educated rich—is certainly true, Trump’s comfortable victory was secured by shifting the dial in almost every voter bracket. While his blue-collar MAGA base showed up in droves, it was also his coalition of “tech bros,” rural voters, growing support from minority groups and increased support from women that swung the election so substantially in his favor. Protectionists and Musk-type libertarians both showed up to get Trump so far over the line.
His MAGA tent now consists of people who, first-and-foremost, voted for him to target foreign businesses in favor of propping up US industry. It’s almost made up of people who liked the sound of DoGE and the vision of the stock market heading to record highs.
It was never going to be possible to satisfy all these voter interests—certainly not at once, and possibly not at all. What they want also changes, fairly dramatically, depending on how you ask the question. Framing tariffs as cracking down on China, in favor of American interests, significantly lifts support among Americans. When framed as a tax on imported goods, unsurprisingly, support starts to wane.
These divisions and conflicting feelings around tariffs are now becoming a problem for Trump, as he refuses to rule out a recession. It’s one thing to promise a tough stance on foreign powers on the campaign trail: but the real-life consequences of these levies, including possible economic contraction, were unsurprisingly never part of his sell.
Having decided to conduct trade policy exclusively through Executive Orders, what happens now will be credited solely to Trump. Markets have a habit of reacting in the extreme—this will be the hope of those predicting that jitters will soon calm and stocks will rally once again. But if stocks prove to be a precursor for the economy more broadly, the President will be confronted with complaints from every part of his coalition. No one likes an economy in decline.
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