Trump promised a boom. Now he's bracing Americans for economic turbulence
Many Republicans say it's too soon, less than two months into his presidency, to draw conclusions about Trump's tariffs and other economic moves.
President Donald Trump promised during the 2024 campaign to turbocharge the economy, declaring he'd work a "miracle" that would bring about "extraordinary" boom times.
Rallying in Grand Rapids, Michigan, the day before the election, Trump predicted his promised victory would swiftly improve the job market and fatten wallets.
"We're just one day ... a half a day ... away from the best jobs, the biggest paychecks, and the brightest economic future the world has ever seen," the former and future Republican president declared as the crowd held up signs reading "Dream big. Again!" and "Trump will fix it."
Now − nearly two months into a second Trump term − his administration is bracing Americans for economic turbulence as last year's campaign rhetoric collides with the reality of an increasingly uncertain economy.
Trump and others in his administration have talked in recent days about the potential for "disturbance," "disruption" and a "detox period" in the economy as it adjusts to Trump's tariffs on leading trade partners and widespread public sector job cuts while pitching the policies as badly needed medicine.
The president wouldn't rule out a recession in an interview that aired Sunday, and on Tuesday he escalated his trade war with Canada by doubling tariffs on steel and aluminum imports. His trade adviser later said the administration is reversing course and won't double the levies.
The words of caution come amid growing concerns about the economy.
U.S. stocks fell on Tuesday following declines Monday in which the Nasdaq and S&P 500 experienced their largest single-day fall since September 2022. Consumer confidence dropped in February by the largest amount since August 2021. Job cuts announced by U.S. employers jumped last month, and some forecasters have reduced estimates for economic growth.
U.S. employers added 151,000 jobs in February, slightly less than forecast, and the unemployment rate inched up. Businesses have been warning about the potential for tariff-induced price increases, including leading retailers such as Target and Best Buy.
Trump's campaign focused heavily on the spike in grocery prices and other affordability concerns under President Joe Biden. The GOP candidate who opened 2024 saying he hoped a financial crash happened under the Democrats' watch "because I don't want to be Herbert Hoover" pledged to tame inflation and ignite economic growth.
Republican confidence and caution
The administration still is projecting confidence its policies will bring long-term benefits.
Responding to the stock market swoon Monday, White House spokesperson Kush Desai said in a statement that Trump "delivered historic job, wage, and investment growth in his first term, and is set to do so again in his second term.”
But GOP leaders increasingly are cautioning that some of Trump's policies could at least have short-term negative consequences.
"Trump policies are going to rebuild the middle class," Rep. Mike Collins, R-Ga., posted on social media Monday. "Some short-term Wall Street pain is worth the long-term gain. America will be stronger."
Opponents are blasting Trump's economic agenda as haphazard and harmful to the economy and say it won't help average Americans.
The full impact remains to be seen. But Trump's policies have introduced more economic uncertainty, said economist Chris Lafakis, and the economic picture is cloudy.
The economy is still "hanging in there," said Lafakis, a director with Moody's Analytics, but he believes the chances of a recession have increased.
Trump administration officials and allies are eager to downplay any economic wobble.
A 'little disturbance'
It started with Trump himself, who said last week in his joint address to Congress that tariffs would create “a little disturbance. ... It won’t be much.” The next day, White House press secretary Karoline Leavitt said there will be a “a little bit of disruption.”
Trump walked back some of his tariff plans after the stock market dip, exempting auto companies from 25% tariffs on goods from Canada and Mexico and then eventually every product covered in a trade agreement with the countries. The one-month exemption still leaves uncertainty, though. On Tuesday, the president again turned up the heat with his announcement of 50% tariffs on Canadian metals, before calling them off after Ontario's leader said the Canadian province would suspend a 25% electricity surcharge on U.S. energy users.
“If you’re a business, it’s hard to know what to make of that, and if you’re an investor − same thing,” Lafakis said.
The economic fundamentals are similar to before the election, he said. “It’s just the uncertainty has risen quite a bit, and I would say the risk of recession has risen as well."
Asked Sunday on Fox News whether there could be a recession this year, Trump said: “I hate to predict things like that. There is a period of transition, because what we’re doing is very big."
'Sliding towards a recession'?
Trump ally Newt Gingrich was more blunt.
"We are sliding towards a recession. And that's just a fact," Gingrich, the former GOP House speaker, said on Fox Business.
Gingrich and other Republicans blame Biden's policies. The changing economic picture coincides with the rollout of Trump's agenda, though.
Beyond tariffs, the economy also could be affected by the Department of Government Efficiency's job cuts at federal agencies, Lafakis said. Elon Musk’s DOGE has made cuts throughout the federal government, implementing mass layoffs.
Economic 'detox'
Treasury Secretary Scott Bessent said Friday that there could be “detox period” as the Trump administration reduces government spending.
"Look, there's going to be a natural adjustment as we move away from public spending to private spending,” Bessent said on CNBC's "Squawk Box." "The market and the economy have just become hooked, and we've become addicted to this government spending.”
Bessent also weighed in on tariffs last week, saying they are about "leveling the playing field." The treasury secretary told the New York Economic Club that "access to cheap goods is not the essence of the American dream.”
Trump campaigned on tackling inflation. But businesses facing increased costs from tariffs generally pass much of those on to consumers, Lafakis said, and Trump administration officials are nodding to that likelihood.
Bessent acknowledged that tariffs could create what he called a "one-time price adjustment." But he said Trump's economic program "is a whole-of-government, holistic program" and "across a continuum, I'm not worried about inflation."
Trump's tariffs also could spark a trade war that hurts American companies that export products.
Democrats and Republicans have been jockeying over how to frame any tariff consequences.
Trump has used the threat of tariffs on Mexican and Canadian goods to demand new efforts to combat illegal immigration and drugs.
Sen. Markwayne Mullin, R-Okla., said, “That fight needs to happen.” As for any economic blowback? “If we’ve got to take a little bit along the way, then we’ll take a little bit,” Mullin said.
House Speaker Mike Johnson told reporters Tuesday that more time needs to pass before opinions sink in on Trump's economic moves. "He's been in office for just over, what, 50 days? This is the 51st day in office. Give the president a chance to have these policies play out," the Louisiana Republican said.
Trump's opponents say his policies go against his campaign pledge to lower costs.
Sen. Angus King, a Maine independent who caucuses with Democrats, said he doesn’t see a coherent economic agenda coming from Trump.
King said he isn’t against tariffs if other countries don’t have the same environmental standards or labor laws, but he noted that’s not the case with a country such as Canada. He worries Trump’s tariff policies will be a burden on American consumers.
“The steps thus far do not appear to me to be doing anything to help ordinary Americans in their daily economic lives.”