Why is Donald Trump crashing the US economy? Because he's high on his own supply of fake news

The Guardian

14-03-2025

Not content with shattering the post-1945 international order, which delivered prosperity and power to his country for eight long decades, Donald Trump is seemingly set on destroying the US economy. And he's doing it because he, and the American right, have lost their ability to grasp reality.
Start with the economic vandalism, unfolding in real time and mesmerising to watch. For weeks, you could see the US stock market falling and falling until on Thursday the S&P index passed an unwanted milestone: it stood more than 10% down from the peak it had reached less than a month earlier, a fall that meets the Wall Street definition of a 'correction'. In other words, even if the market eventually rallies, this is no blip.
The talk now is of a recession and you can tell that Trump himself suspects it's coming. 'I hate to predict things like that,' he said this week. 'There is a period of transition because what we're doing is very big. We're bringing wealth back to America … It takes a little time.' Did you catch that? The great booster, who campaigned on a promise to turn things around 'on day one', is now adopting the lotus position, talking of 'transition' and urging patience.
The source of the trouble is not mysterious. It is Trump himself. His actions since taking office less than two months ago have spooked investors. They crave stability but see a president who governs by whim. Those whims can change hourly – imposing a tariff after breakfast only to drop it before lunch. One minute it's a 50% levy on Canadian aluminium, the next it's 200% on European wine, only for one or the other to be binned within hours. It keeps Trump in the news, which he loves, but plays havoc with companies that have to plan for the long term. Confronted by chaos, they prefer to wait to see where things settle. That means orders on hold, workers without work, less money in everyone's pocket.
Add in a wild-eyed guy with a chainsaw taking chunks out of a federal bureaucracy that provides services that, for all their Ayn Rand talk of a minimal state, business leaders rely on – whether it's schools, roads or air traffic controllers to keep planes in the sky – and you can see why the only surging number on Wall Street right now is the one that measures pessimism.
To be clear, it's not just the manic style of Trump and Elon Musk that's causing alarm. Even if imposed calmly, tariffs are a prosperity killer. Trump may be their biggest advocate, but it's clear he doesn't understand how they work. He speaks as if the people paying them will be hated foreigners, the likes of China or Canada forced to pay billions into US coffers. When, in fact, tariffs are a sales tax levied on US consumers who have to pay extra for imported goods. A tariff on foreign cars, say, is not paid by Germany but by an American who buys a BMW. It drives prices up for Americans. When other countries hit back with tariffs of their own, making US products harder to sell, you're in a trade war that only makes everything worse.
Hence the current dread of stagflation, the grim combination of zero growth and rising inflation. The word was born in the Jimmy Carter era, but the Trumpcession will have bonus features all its own. When I spoke to Heather Boushey, who served as an economic adviser to the Biden administration, for the latest Politics Weekly America podcast, she told me that Musk's supremacy over so much of the federal government, even as he continues to run his own mega-businesses, is having one particular chilling effect. 'Companies are looking at this and saying: 'I can't compete with an Elon Musk that's in charge of the regulatory agencies, that's going to do things only for himself.' That's going to stymie investment, it's going to stymie innovation, and ultimately be terrible for the US economy.'
Boushey adds that Trump's US will be less able to weather a recession, because the Trump-Musk cuts are stripping away so much of the infrastructure of support, cutting a combined total of more than $1tn from the Medicaid and food stamps programmes alone. When the storm hits, families will go hungry.
It's bad for the country and bad for Trump politically: the people most dependent on soon-to-be gutted government help such as Medicare or Medicaid are Trump voters. As the impact of the cuts kicks in – national parks closed during the summer, delayed benefits for veterans, a deadly accident, for example, in an area previously safeguarded – many Americans could sour on the president who promised to make their lives better. Especially when they see him go ahead with his signature policy: a $4.5tn tax cut that will massively benefit the very richest.
Why, then, is Trump pursuing a course of action that can only damage the country and dent his own standing? The explanation lies in the way Trump sees the world. Which is through a lens clouded by the very phenomenon he once did so much to identify: fake news.
For most of the past decade, the focus has been on the likes of Trump and Musk as peddlers of falsehoods. There has been less attention paid to their role as consumers of lies. And yet it's long been clear that Musk is spending too much time on X and is getting extremely high on his own supply. Witness his credulous swallowing of all kinds of far-right rubbish about Britain.
Trump is scarcely any better, believing provable nonsense about Volodymyr Zelenskyy's poll ratings being in the single digits, when in fact the Ukrainian leader's numbers are much better than his, to pick just one instance of Trump putting aside the briefings he could have from the world's best-resourced intelligence agencies and preferring to gobble up internet slop instead.
It's a function of Trump not shifting his core views in decades – he was banging on about tariffs in the 1980s – and being, as Zelenskyy memorably put it, 'trapped' in a 'disinformation bubble'. It consists of the team of sycophants that now envelops him – the 'adults in the room' of the first term are long gone – and whose message is reinforced when he meets the press: note how many of the supposed reporters whom Trump encounters are, in fact, representatives from pro-Trump outlets so slavish they make Fox News look like Edward R Murrow.
The result, says one longtime Trump watcher, is that 'he's more sheltered from outside information than he ever has been before'. Like Saddam Hussein in his bunker as US forces approach the palace, he is being told that tariffs made the US rich in the 19th century and will do so again, that Elon Musk is popular and that the people are grateful to their leader, even when the economy is nosediving. Inside the info-bubble, any contrary voice can be dismissed, even if it requires acrobatics to do it. Trump's latest target is the Murdoch-owned, conservative Wall Street Journal, which dared point out the dangers of a trade war: Trump countered that the 'globalist' WSJ was 'owned by the polluted thinking of the European Union'. Inside the bubble, there is no room for truth: it must be kept out by lies.
For now, and armed with the loudest megaphone on the planet, the US president can keep reality at bay. But eventually, Americans will be able to see with their own eyes and in their own lives what Trump has done to the US and the wider world. Their daily experience will expose him for what he is: a confidence trickster who has made them poorer and less safe. The only question is when.
Jonathan Freedland is a Guardian columnist