Trump's billionaire backers are suffering a heavy dose of buyer's remorse

Telegraph

08-04-2025

They can hardly complain that Donald Trump is doing what he said he would. But it is astonishing how many of those who really should have known this would happen convinced themselves otherwise.
On the other hand, could anyone really have forecast the current madness?
The US president is now threatening to retaliate to China's retaliation, raising the effective tariff on Chinese goods to 104pc. He might as well ban Chinese imports altogether and be done with it.
In any case, tariffs on such a scale would cause close to a complete decoupling of the two economies.
The latest example of buyer's remorse over the turn of events comes from the hedge fund titan Bill Ackman, a prominent if less than fully committed Trump supporter, who now protests that 'this is not what we voted for'.
Perhaps Mr Ackman was asleep during the long months of campaigning that led up to November's presidential election, for Mr Trump could not have been clearer about what he intended.
And indeed, tens of millions of Americans voted for precisely what he is now doing.
Mr Ackman seems to have thought that, as with Trump's first presidency, wiser counsel would prevail, and that the bits of Trump's agenda that he approved of, such as tax cuts and deregulation would sail through, but that the trade protectionism would be largely dropped.
Big mistake, and clear evidence of the arrogance that often blinds those who think that making tons of money gives them a special insight into – and influence over – the way the world works.
History is littered with examples of financial and business elites who think they can control the political forces they unleash, only to find that events run away from them.
Once you let the tiger out of his cage, there's no controlling him.
'We are heading for a self-induced, economic nuclear winter, and we should start hunkering down,' Mr Ackman wrote on X.
'By placing massive and disproportionate tariffs on our friends and our enemies alike and thereby launching a global economic war against the whole world at once, we are in the process of destroying confidence in our country as a trading partner, as a place to do business, and as a market to invest capital'.
He's not the only one. Even Elon Musk, increasingly alarmed at the impact tariff wars are going to have on Tesla, has taken to X extolling the virtues of free trade.
The Trump confidante – or should that be former confidante? – now suggests there should be tariff-free trade between Europe and the US. Despite his closeness to the US president, it appears that he too has not been listening.
Few are going to shed a tear for the likes of Messrs Ackman and Musk, or any of the other financiers and business leaders who lined up in support of Mr Trump on inauguration day. They had it coming.
It's like something out of Tom Wolfe's The Bonfire of the Vanities. Ordinary mortals will inevitably take pleasure in seeing these vainglorious 'masters of the universe' humbled and forced to admit they got it wholly wrong.
Mr Ackman advocates a 90-day 'time out' to allow for negotiations on 'unfair asymmetric tariff deals', but there is no sign of Mr Trump – who has warned foreign governments that they would have to 'pay a lot of money' to avoid tariffs – agreeing to anything quite so sensible.
The fact is that Mr Trump believes in tariffs as an enabler of US re-industrialisation, and he's not for turning back.
A journalist who asked the US president what degree of pain he was willing to tolerate before taking evasive action was told her question was 'so stupid' and that 'sometimes you have to take medicine to fix something'.
If it's only about making America more economically self-sufficient and resilient, and righting the wrongs in today's globalised trading system, then most of us will have at least some sympathy with what Mr Trump is trying to achieve.
The story of the humble Brussels sprout is possibly apocryphal, but perfectly embodies the sort of thing Trump is on about.
The sprout is picked at a farm near Edinburgh by migrant workers before being sent by lorry to the buyers' centralised cleaning and packaging plant somewhere in Poland.
Once duly processed, it then finds its way back to a supermarket shelf in Edinburgh close to where it was originally grown, having been through a round trip of nearly 3,000 miles.
Apocryphal, perhaps. But not at all unusual amid the madness of today's hyper-efficient, corporate supply chains, with materials, products and components constantly criss-crossing national borders.
Trump wants to put a stop to this nonsense and have the US do more of its own stuff.
Yet it is one thing to highlight these absurdities, quite another to act on them.
The reason why so many US stock prices are plunging is only partly down to mounting fears of a recession. Mainly it's about the pioneering role many American companies have played in globalisation, building their business models around access to cheap labour in far away places. That model now looks to be at severe risk.
Most iPhones, for instance, are still made in China. If Apple were to pass on the full cost of the new tariffs – including the additional 50pc Trump threatened on Monday – it would double the US retail price of an iPhone 16 Pro Max, with a 6.9-inch display and 1 terabyte of storage, from $1,599 (£1,253) to $3,200. One way or another, Apple's profits and/or revenues are about to get trounced.
So when Mr Trump tells investors to ' be strong, courageous, and patient, and greatness will be the result', he basically doesn't know what he's talking about.
A more resilient America is a worthy ambition, but it is likely to come at the price of a far less profitable corporate America and a much more expensive American economy.
Already, clueless central banks are left further in the mire, not knowing which way to turn. Like Dr Dolittle's 'pushmi-pullyu', it's impossible to know which way interest rates should move.
In America, tariffs are almost bound to be at one and the same time inflationary and contractionary.
Inflationary because they add to the price of imports, and contractionary because they squeeze disposable incomes, undermine business confidence, and crash the stock market.
But in the UK and Europe the effect will be somewhat different. By coincidentally clobbering export demand and driving a surge in cheap imports displaced from Trump's America, the impact will be doubly deflationary.
Once a panic sets in, it tends to be self-reinforcing, with strong, negative feedback loops.
It's going to take a long time for the dust to settle, and when it does, we are all likely to find ourselves a good deal poorer.