Wall Street Journal: ‘Someone should sue’ Trump over tariffs
Ashleigh Fields
Sat, March 8, 2025
The Wall Street Journal editorial board took a swipe at President Trump’s recent tariff threats, alleging the administration is using a 48-year-old law to start a trade war.
In a recent op-ed, the board warned of a possible jolt in consumer prices once the tariffs go into full effect and urged someone to file a lawsuit in response.
“The President invokes a law that doesn’t give him power to impose sweeping tariffs,” they wrote in the article’s subhead. “Someone should sue.”
The pressure comes after Trump introduced 25 percent tariffs on Canada and Mexico and levied an additional 10 percent tariff on Chinese imports. The taxes went into effect earlier this week, but the president has issued some exceptions in recent days.
The 1977 International Emergency Economic Powers Act (IEEPA) permits the executive branch to investigate, block, prohibit or regulate any imports and exports with foreign countries in the case of an “unusual or extraordinary threat.”
The Journal’s editorial board further accused Trump of misinterpreting the law.
“He’s treating the North American economy as a personal plaything, as markets gyrate with each presidential whim,” the board wrote. “It’s doubtful Mr. Trump even has the power to impose these tariffs, and we hope his afflatus gets a legal challenge.”
The Journal described Trump’s actions as a “fundamental revision” of the IEEPA statute with direct quotes from the Supreme Court’s 2022 ruling in West Virginia v. EPA, a case involving the Environmental Protection Agency’s power to restrict emissions from power plants.
They noted a lack of historical precedent as a clear sign of Trump’s attempt to expand his authority under the guise of the fentanyl opioid crisis as a qualifying “national emergency.”
Under the ruling, the board wrote, “Congress must expressly authorize economically and politically significant executive actions, which Mr. Trump’s tariffs undeniably are.”
“Whether fentanyl is an unusual and extraordinary threat is debatable, however, since drugs have been pouring across the borders for decades,” they continued. “The bigger problem is that IEEPA doesn’t clearly authorize tariffs.”
The board also outlined the limits on presidential tariff authority, referring to a lower court’s decision to uphold former President Nixon’s use of a law predating IEEPA. In that case, Nixon imposed an across-the-board 10 percent tariff to address the nation’s growing trade deficit — which was later subjected to limitations by Congress.
“Mr. Trump’s tariff doesn’t appear reasonably related to the fentanyl emergency,” the Journal’s board wrote. “And Congress seemed to dislike Nixon’s use of emergency powers to deal with trade issues since three years later it gave the President limited authority to impose tariffs.”
“Mr. Trump may have shunned those authorities because he wants carte blanche to impose tariffs,” they added.
The Journal’s latest criticism follows an editorial from earlier this week, where the board slammed Trump for the “dumbest tariff plunge.”
Copyright 2025 Nexstar Media, Inc. All rights reserved.
‘America First’ policies are threatening American exceptionalism as the economy and markets flash warning signsAshleigh Fields
Sat, March 8, 2025
The Wall Street Journal editorial board took a swipe at President Trump’s recent tariff threats, alleging the administration is using a 48-year-old law to start a trade war.
In a recent op-ed, the board warned of a possible jolt in consumer prices once the tariffs go into full effect and urged someone to file a lawsuit in response.
“The President invokes a law that doesn’t give him power to impose sweeping tariffs,” they wrote in the article’s subhead. “Someone should sue.”
The pressure comes after Trump introduced 25 percent tariffs on Canada and Mexico and levied an additional 10 percent tariff on Chinese imports. The taxes went into effect earlier this week, but the president has issued some exceptions in recent days.
The 1977 International Emergency Economic Powers Act (IEEPA) permits the executive branch to investigate, block, prohibit or regulate any imports and exports with foreign countries in the case of an “unusual or extraordinary threat.”
The Journal’s editorial board further accused Trump of misinterpreting the law.
“He’s treating the North American economy as a personal plaything, as markets gyrate with each presidential whim,” the board wrote. “It’s doubtful Mr. Trump even has the power to impose these tariffs, and we hope his afflatus gets a legal challenge.”
The Journal described Trump’s actions as a “fundamental revision” of the IEEPA statute with direct quotes from the Supreme Court’s 2022 ruling in West Virginia v. EPA, a case involving the Environmental Protection Agency’s power to restrict emissions from power plants.
They noted a lack of historical precedent as a clear sign of Trump’s attempt to expand his authority under the guise of the fentanyl opioid crisis as a qualifying “national emergency.”
Under the ruling, the board wrote, “Congress must expressly authorize economically and politically significant executive actions, which Mr. Trump’s tariffs undeniably are.”
“Whether fentanyl is an unusual and extraordinary threat is debatable, however, since drugs have been pouring across the borders for decades,” they continued. “The bigger problem is that IEEPA doesn’t clearly authorize tariffs.”
The board also outlined the limits on presidential tariff authority, referring to a lower court’s decision to uphold former President Nixon’s use of a law predating IEEPA. In that case, Nixon imposed an across-the-board 10 percent tariff to address the nation’s growing trade deficit — which was later subjected to limitations by Congress.
“Mr. Trump’s tariff doesn’t appear reasonably related to the fentanyl emergency,” the Journal’s board wrote. “And Congress seemed to dislike Nixon’s use of emergency powers to deal with trade issues since three years later it gave the President limited authority to impose tariffs.”
“Mr. Trump may have shunned those authorities because he wants carte blanche to impose tariffs,” they added.
The Journal’s latest criticism follows an editorial from earlier this week, where the board slammed Trump for the “dumbest tariff plunge.”
Copyright 2025 Nexstar Media, Inc. All rights reserved.
US stocks are down so far this year. · Fortune · Spencer Platt—Getty Images
Jason Ma
Sat, March 8, 2025
U.S. outperformance in the global economy and across financial markets is fading as President Donald Trump's tariffs weigh on growth prospects and send investors to seek gains elsewhere. U.S. stocks are down so far this year and the Nasdaq slipped into correction territory, while European and Chinese stocks are soaring.
A few months ago, the U.S. economy and financial markets looked unstoppable, while Europe and China were struggling to break out of prolonged weakness. But that is turning upside down as President Donald Trump presses ahead with a tariff agenda that's meant to put America first.
After predicting continued "American exceptionalism," Wall Street has suddenly turned more pessimistic. On Friday, analysts at Bank of America said "U.S. exceptionalism is fading" and warned recent economic reports point to a growing likelihood of stagflation—a combination of weak growth and high inflation.
Michael Brown, senior research strategist at Pepperstone, was more blunt, saying late Thursday that the dollar is tumbling "with jitters over the state of the U.S. economy continuing to exert considerable pressure, and the 'U.S. exceptionalism' theme now being in tatters."
The White House told Fortune in a statement that tariffs played a key role in America's industrialization, stretching back to the 1800s and President William McKinley.
"President Trump was elected with a resounding mandate to institute his America First economic agenda of tariffs in addition to deregulation, tax cuts, and the unleashing of American energy," spokesman Kush Desai said. "Trillions of dollars in investment commitments from Apple, TSMC, and other industry leaders are indicative of the successes in store for America under President Trump."
To be sure, U.S. growth was already expected to cool a bit from robust gains to still-solid expansion. But in recent weeks, a range of economic indicators has started worsening, including consumer spending and inflation expectations, as tariffs loom.
Surveys of businesses have also highlighted growing concern about tariffs and uncertainty about where they're headed. In addition to tariffs on Mexico, Canada and China, Trump has threatened tariffs on steel, aluminum, the EU, chips, autos, and pharmaceuticals, as well as retaliatory duties across all trade partners.
The Atlanta Fed’s GDPNow tracker shows the first quarter is currently on track for a 2.4% contraction after signaling a 1.5% decline last week and reversing from 2.3% growth on Feb. 19. While the widely followed indicator can be volatile and was hammered by a deeper trade deficit, Wall Street analysts are downgrading their U.S. growth views.
On Friday, JPMorgan said the economy would slow toward a 1% pace if tariffs on Canada and Mexico are imposed after large portions were put on a one-month pause. That's down from their earlier view of 2% this year. Meanwhile, others on Wall Street are pricing in greater odds of a recession, though it remains outside the scope of their baseline forecasts.
By contrast, JPMorgan sees the eurozone economy expanding by 2%—unless an intense U.S.-EU trade war erupts. That's as European leaders and Germany's incoming leadership have vowed a seismic break from earlier fiscal austerity and toward debt-fueled spending, especially on defense as the U.S. distances itself from traditional allies and warms up to Russia.
China also plans to ramp up stimulus as Trump has already doubled tariffs on imports from the world's second largest economy to 20%.
The sudden upending of economic prospects is being reflected in stocks. The S&P 500 has lost 2% in the year to date after soaring more than 20% in 2023 and 2024. But Germany's DAX index is up 15.6%, and Hong Kong's Hang Sing index has shot up 21% helped by bullishness on Chinese AI technology.
For this part, Trump said Thursday he isn't watching the stock market as he plans his tariff policies and repeatedly blamed "globalists" for the recent stock selloff.
“We’ve been treated very unfairly as a country,” he said. “We protect everybody. We do everything for all these countries, and a lot of these are globalist in nature.”
In an op-ed on Wednesday, market gurus Ed Yardeni and Eric Wallerstein said they still see a 55% chance of a "Roaring 20s" scenario where the US economy continues to power ahead, fueled by a tech-driven boost.
But they cut the odds of a bullish "meltup" to 10% from 25%, while raising the odds of a bear market and a tariff-induced recession to 35% from 20%.
"We are still betting on the resilience of consumers and the economy," they warned. "However, Trump Turmoil 2.0 is significantly testing the resilience of both."
This story was originally featured on Fortune.com
Trump won't predict whether recession could result from his tariff moves
Doina Chiacu
Sun, March 9, 2025
REUTERS
Scroll back up to restore default view.
WASHINGTON (Reuters) -President Donald Trump declined to predict whether the U.S. could face a recession amid stock market concerns about his tariff actions on Mexico, Canada and China over fentanyl.
The Republican president, whose trade policies have rekindled fears of worsening U.S. inflation, was asked if he expected a recession this year in a Fox News interview broadcast on Sunday.
"There is a period of transition, because what we're doing is very big. We're bringing wealth back to America," Trump told the "Sunday Morning Futures" program. "It takes a little time, but I think it should be great for us."
Tariffs have been one key concern for investors, as many believe they can harm economic growth and be inflationary. While Trump acknowledged as early as February 2 that his sweeping tariffs could cause some "short-term" pain for Americans, his own advisers have repeatedly downplayed any negative impact.
"Absolutely not," Commerce Secretary Howard Lutnick said on Sunday. "There's going to be no recession in America."
Lutnick did acknowledge that the Trump tariffs would lead to higher prices for U.S. consumers on some foreign-made goods, but said American products will get cheaper.
"He's not going to step off the gas," Lutnick said on NBC's "Meet the Press."
Trump imposed new 25% tariffs on imports from Mexico and Canada last Tuesday, along with fresh duties on Chinese goods, after he declared the top three U.S. trading partners had failed to do enough to stem the flow of deadly fentanyl and its precursor chemicals into the United States.
Two days later, he exempted many imports from Mexico and some from Canada from those tariffs for a month, the latest twist in a fluctuating trade policy that has whipsawed markets and fanned worries about U.S. inflation and growth.
It was the second time in two months that Trump has walked back fentanyl-related tariffs on the U.S. neighbors.
"If fentanyl ends, I think these will come off. But if fentanyl does not end, or he's uncertain about it, he will stay this way until he is comfortable," Lutnick said.
White House officials say Canada and Mexico are conduits for shipments of fentanyl - which is 50 times more potent than heroin - and its precursor chemicals into the U.S. in small packages that are often not inspected.
Public data shows 0.2% of all fentanyl seized in the U.S. comes from the Canadian border, while the vast majority arrives via Mexico. In a concession to Trump, Canada appointed a new fentanyl czar last month.
The exemptions for the two largest U.S. trading partners expire on April 2, when Trump has threatened to impose a global regime of reciprocal tariffs on all U.S. trading partners.
Kevin Hassett, director of the White House's National Economic Council, said on ABC's "This Week" that he hoped the drug-related tariffs can be resolved by the end of the month so the focus can be on imposing the reciprocal measures.
TRADE CONFUSION
Seesaw tariff announcements have unnerved Wall Street as investors say flip-flopping moves by the Trump administration to roll back levies on trading partners are causing confusion rather than bringing relief.
The Trump trade policies have raised fears of trade wars that could slam economic growth and raise prices for Americans still smarting from years of high inflation.
China said it would "resolutely counter" pressure from the United States on the fentanyl issue after Trump imposed tariffs of 20% on all imports from China.
Democratic senators from two border states criticized Trump's tariff policy as inconsistent and irresponsible.
"These broad, indiscriminate and on-again, off-again tariffs don't help anyone. They don't help farmers. They don't help auto workers. They're a mistake," U.S. Senator Adam Schiff of California said on ABC.
"Pounding Canada as if they're the exact same thing as China - it just creates this chaotic feeling," U.S. Senator Elissa Slotkin, of Michigan, said on NBC.
Trump said he put a hold on tariffs on some goods last week because, "I wanted to help Mexico and Canada," according to the "Sunday Morning Futures" interview, which was taped on Thursday.
The three countries are partners in a North American trade pact that was renegotiated by Trump during his first White House term.
Yet Trump also told the Fox News program that those 25% tariffs "may go up" and he said on Friday that his administration could soon impose reciprocal tariffs on Canadian lumber and other products.
Separately, U.S. tariffs of 25% on imports of steel and aluminum will take effect as scheduled on Wednesday, Lutnick said during the interview. Canada and Mexico are both top exporters of the metals to U.S. markets, with Canada in particular accounting for most aluminum imports.
Growing Fear Of 'Trump Recession' Amid Tariff Whiplash And DOGE Chaos
Josh Boak / AP
Sat, March 8, 2025
President Donald Trump delivers remarks in the Oval Office of the White House in Washington, Friday, March 7, 2025. (Pool via AP) via Associated Press
WASHINGTON (AP) — With his flurry of tariffs, government layoffs and spending freezes, there are growing worries President Donald Trump may be doing more to harm the U.S. economy than to fix it.
The labor market remains healthy with a 4.1% unemployment rate and 151,000 jobs added in February, and Trump likes to point to investment commitments by Apple and Taiwan Semiconductor Manufacturing Company to show that he’s delivering results.
But Friday’s employment report also found that the number of people stuck working part-time because of economic circumstances jumped by 460,000 last month. In the leisure and hospitality sectors that reflect consumers having extra money to spend, 16,000 jobs were lost. And the federal government reduced its payrolls by 10,000 in a potential harbinger of the alarm being sounded by the stock market, consumer confidence and other measures of where the economy is headed.
Since January, the economic policy uncertainty index has spiked 41% to a level, 334.5, that in the past signaled a recession. Nicholas Bloom, a Stanford University economist and co-developer of the uncertainty index, said it’s unclear how this will play out, but he’s worried.
“I have an increasing fear we will enter into what may become known as the ‘Trump recession,’” he said. “Ongoing policy turbulence and a tariff war could tip the U.S. economy into its first recession in five years.” That last recession occurred under Trump because of the coronavirus pandemic.
For his part, Trump seems comfortable with the uncertainty that he’s generating, saying that any financial pain from import taxes is a mere “disruption” that will eventually lead to more factories relocating to the United States and stronger growth.
If Trump’s gambit succeeds, the Republican would cement his reputation as an unconventional leader who proved doubters wrong. But if Trump’s tariffs backfire, much of the price would be paid by everyday Americans who could suffer from job losses, lower wages, higher inflation and, possibly, an injured sense of national pride.
In an interview to air Sunday on Fox News’ “Sunday Morning Futures,” Trump was pressed to provide some clarity on his tariffs agenda that has caused uncertainty to fester. The president largely hedged his answer and blamed the 6% drop in the stock market over the past two weeks on “big globalists.”
“You know, the tariffs could go up as time goes by, and they may go up and, you know, I don’t know if it’s predictability,” the president said.
The White House maintains that Friday’s jobs report showed the administration’s strategy is working because manufacturers added 10,000 jobs. Of the manufacturing gains, 8,900 jobs came from the auto sector, recovering some of the industry’s job losses in January. The White House also suggested that the loss of leisure and hospitality jobs was the result of flu season and people having depleted savings and credit card debt because of President Joe Biden’s term.
Traders work on the floor of the New York Stock Exchange (NYSE) in the Financial District in New York City on March 4, 2025. (Photo by TIMOTHY A. CLARY / AFP) (Photo by TIMOTHY A. CLARY/AFP via Getty Images) TIMOTHY A. CLARY via Getty ImagesMore
“I thought it was a really, really impressive jobs report,” Kevin Hassett, director of the White House National Economic Council, said of Friday’s numbers.
Hassett said the additional factory jobs were the result of companies “on-shoring” work because of the coming tariffs.
“This is the first of many reports that are going to look like this,” Hassett said with regard to the hiring in the industrial sector.
The stock market selloff raises doubts about whether tariffs will create the promised jobs.
“Markets anticipate,” said John Silvia, CEO of Dynamic Economic Strategy. “The turn down the dark alley of tariffs signals higher inflation, slower economic growth and a weaker U.S. dollar. It is an economic horror movie in slow motion.”
Trump has instigated a trade war in the last week with Canada, Mexico and China, only to then hit a monthlong pause on some of his import taxes because of the threat to U.S. auto factory jobs and because of Mexico’s latest efforts to curb fentanyl smuggling.
More tariffs are coming on April 2 for Europe, Trump says, possibly putting the United States into open conflict with a continent it helped rebuild after World War II. South Korea, India and Brazil could also face new tariffs, Trump said in his address to a joint session of Congress on Tuesday.
Silvia said Trump’s tariffs need to be more targeted with regard to products and nations and set at lower rates, adding that doing so would provide an assurance that there is solid research backing the measures.
There were multiple signs of uncertainty and concerns about the tariffs in the Federal Reserve’s beige book, a collection of anecdotes from hundreds of businesses that the Fed releases eight times a year.
Published Wednesday, the beige book included 47 references to uncertainty, up from just 17 in the previous edition in January.
“Many businesses noted heightened economic uncertainty and expressed concern about tariffs,” the Fed’s New York branch reported. “Looking ahead, businesses were notably less optimistic.”
“This is the perfect storm for businesses,” said Brian Bethune, an economist at Boston College. “How can you possibly plan anything in this environment?”
Still, Treasury Secretary Scott Bessent said Friday on CNBC that he sees positive momentum in combating inflation. He said crude oil prices have fallen since Trump’s inauguration, as have the interest rates on 10-year U.S. Treasury notes and mortgages.
Still, interest rates on government debt are higher than they were last year in September, and the recent decline could reflect a slowdown in economic demand.
Bessent suggested a core problem is that the U.S. economy has become overly reliant on government deficits and that the Trump administration would be fostering stronger growth in the private sector.
“We’ve become addicted to this government spending, and there’s going to be a detox period,” he said.
This particular form of economic rehab is coming from Trump’s Department of Government Efficiency, which is led by T-shirted tech mogul Elon Musk, the owner of Tesla, X and SpaceX, among other companies.
WASHINGTON, DC - FEBRUARY 26: Tesla and SpaceX CEO Elon Musk, head of the Department of Government Efficiency (DOGE), stands as U.S. President Donald Trump (R) speaks during a Cabinet meeting at the White House on February 26, 2025 in Washington, DC. Trump is holding the first Cabinet meeting of his second term. (Photo by Andrew Harnik/Getty Images) Andrew Harnik via Getty ImagesMore
The alleged savings by DOGE are still too paltry to bend the troubling trajectory of the national debt that is largely being driven by tax revenues that are insufficient to cover the rising costs of Social Security and Medicare.
But the initiative has started to downsize the federal workforce in ways that could surface in future jobs reports. Roughly 75,000 employees took the deferred resignation plan. There are also thousands of probationary federal workers who were fired and tens of thousands of layoffs to come based on the administration’s plans.
Asked Friday in the Oval Office if the government layoffs could hurt the overall labor market, Trump said the economy would be great.
“I think the labor market is going to be fantastic, but it’s going to have high-paying manufacturing jobs,” he said. ”We had too many people in government. You can’t just do that.”
___
AP economics writer Christopher Rugaber contributed to this report.
Josh Boak / AP
Sat, March 8, 2025
President Donald Trump delivers remarks in the Oval Office of the White House in Washington, Friday, March 7, 2025. (Pool via AP) via Associated Press
WASHINGTON (AP) — With his flurry of tariffs, government layoffs and spending freezes, there are growing worries President Donald Trump may be doing more to harm the U.S. economy than to fix it.
The labor market remains healthy with a 4.1% unemployment rate and 151,000 jobs added in February, and Trump likes to point to investment commitments by Apple and Taiwan Semiconductor Manufacturing Company to show that he’s delivering results.
But Friday’s employment report also found that the number of people stuck working part-time because of economic circumstances jumped by 460,000 last month. In the leisure and hospitality sectors that reflect consumers having extra money to spend, 16,000 jobs were lost. And the federal government reduced its payrolls by 10,000 in a potential harbinger of the alarm being sounded by the stock market, consumer confidence and other measures of where the economy is headed.
Since January, the economic policy uncertainty index has spiked 41% to a level, 334.5, that in the past signaled a recession. Nicholas Bloom, a Stanford University economist and co-developer of the uncertainty index, said it’s unclear how this will play out, but he’s worried.
“I have an increasing fear we will enter into what may become known as the ‘Trump recession,’” he said. “Ongoing policy turbulence and a tariff war could tip the U.S. economy into its first recession in five years.” That last recession occurred under Trump because of the coronavirus pandemic.
For his part, Trump seems comfortable with the uncertainty that he’s generating, saying that any financial pain from import taxes is a mere “disruption” that will eventually lead to more factories relocating to the United States and stronger growth.
If Trump’s gambit succeeds, the Republican would cement his reputation as an unconventional leader who proved doubters wrong. But if Trump’s tariffs backfire, much of the price would be paid by everyday Americans who could suffer from job losses, lower wages, higher inflation and, possibly, an injured sense of national pride.
In an interview to air Sunday on Fox News’ “Sunday Morning Futures,” Trump was pressed to provide some clarity on his tariffs agenda that has caused uncertainty to fester. The president largely hedged his answer and blamed the 6% drop in the stock market over the past two weeks on “big globalists.”
“You know, the tariffs could go up as time goes by, and they may go up and, you know, I don’t know if it’s predictability,” the president said.
The White House maintains that Friday’s jobs report showed the administration’s strategy is working because manufacturers added 10,000 jobs. Of the manufacturing gains, 8,900 jobs came from the auto sector, recovering some of the industry’s job losses in January. The White House also suggested that the loss of leisure and hospitality jobs was the result of flu season and people having depleted savings and credit card debt because of President Joe Biden’s term.
Traders work on the floor of the New York Stock Exchange (NYSE) in the Financial District in New York City on March 4, 2025. (Photo by TIMOTHY A. CLARY / AFP) (Photo by TIMOTHY A. CLARY/AFP via Getty Images) TIMOTHY A. CLARY via Getty ImagesMore
“I thought it was a really, really impressive jobs report,” Kevin Hassett, director of the White House National Economic Council, said of Friday’s numbers.
Hassett said the additional factory jobs were the result of companies “on-shoring” work because of the coming tariffs.
“This is the first of many reports that are going to look like this,” Hassett said with regard to the hiring in the industrial sector.
The stock market selloff raises doubts about whether tariffs will create the promised jobs.
“Markets anticipate,” said John Silvia, CEO of Dynamic Economic Strategy. “The turn down the dark alley of tariffs signals higher inflation, slower economic growth and a weaker U.S. dollar. It is an economic horror movie in slow motion.”
Trump has instigated a trade war in the last week with Canada, Mexico and China, only to then hit a monthlong pause on some of his import taxes because of the threat to U.S. auto factory jobs and because of Mexico’s latest efforts to curb fentanyl smuggling.
More tariffs are coming on April 2 for Europe, Trump says, possibly putting the United States into open conflict with a continent it helped rebuild after World War II. South Korea, India and Brazil could also face new tariffs, Trump said in his address to a joint session of Congress on Tuesday.
Silvia said Trump’s tariffs need to be more targeted with regard to products and nations and set at lower rates, adding that doing so would provide an assurance that there is solid research backing the measures.
There were multiple signs of uncertainty and concerns about the tariffs in the Federal Reserve’s beige book, a collection of anecdotes from hundreds of businesses that the Fed releases eight times a year.
Published Wednesday, the beige book included 47 references to uncertainty, up from just 17 in the previous edition in January.
“Many businesses noted heightened economic uncertainty and expressed concern about tariffs,” the Fed’s New York branch reported. “Looking ahead, businesses were notably less optimistic.”
“This is the perfect storm for businesses,” said Brian Bethune, an economist at Boston College. “How can you possibly plan anything in this environment?”
Still, Treasury Secretary Scott Bessent said Friday on CNBC that he sees positive momentum in combating inflation. He said crude oil prices have fallen since Trump’s inauguration, as have the interest rates on 10-year U.S. Treasury notes and mortgages.
Still, interest rates on government debt are higher than they were last year in September, and the recent decline could reflect a slowdown in economic demand.
Bessent suggested a core problem is that the U.S. economy has become overly reliant on government deficits and that the Trump administration would be fostering stronger growth in the private sector.
“We’ve become addicted to this government spending, and there’s going to be a detox period,” he said.
This particular form of economic rehab is coming from Trump’s Department of Government Efficiency, which is led by T-shirted tech mogul Elon Musk, the owner of Tesla, X and SpaceX, among other companies.
WASHINGTON, DC - FEBRUARY 26: Tesla and SpaceX CEO Elon Musk, head of the Department of Government Efficiency (DOGE), stands as U.S. President Donald Trump (R) speaks during a Cabinet meeting at the White House on February 26, 2025 in Washington, DC. Trump is holding the first Cabinet meeting of his second term. (Photo by Andrew Harnik/Getty Images) Andrew Harnik via Getty ImagesMore
The alleged savings by DOGE are still too paltry to bend the troubling trajectory of the national debt that is largely being driven by tax revenues that are insufficient to cover the rising costs of Social Security and Medicare.
But the initiative has started to downsize the federal workforce in ways that could surface in future jobs reports. Roughly 75,000 employees took the deferred resignation plan. There are also thousands of probationary federal workers who were fired and tens of thousands of layoffs to come based on the administration’s plans.
Asked Friday in the Oval Office if the government layoffs could hurt the overall labor market, Trump said the economy would be great.
“I think the labor market is going to be fantastic, but it’s going to have high-paying manufacturing jobs,” he said. ”We had too many people in government. You can’t just do that.”
___
AP economics writer Christopher Rugaber contributed to this report.
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