The Tariff Debate: Why the "So What?" Attitude Might Be Misleading
The debate over President Donald Trump’s tariffs has been a contentious one, with critics arguing that they are rooted in flawed logic, likely to drive up prices for American consumers, and potentially harmful to the global economy. Yet, in the face of these criticisms, a recurring question has emerged: “So what?” The implication is that perhaps the tariffs aren’t as catastrophic as predicted, especially since Wall Street appears unfazed by the ongoing trade battles with Canada and Mexico—a conflict even the Wall Street Journal labeled as the “dumbest trade war in history.” If the stock market isn’t panicking, maybe the tariffs aren’t the economic disaster economists warned about. But here’s the catch: economic disasters often unfold slowly, almost imperceptibly, before striking with full force.
Wall Street’s Tariff Fatigue: Why Markets Might Not Be a Reliable Barometer
Right now, Wall Street seems to be suffering from tariff fatigue. The markets are focusing on more immediate indicators, such as Friday’s jobs report (which was solid, even if slightly weaker than expected) and the upcoming January Consumer Price Index and Federal Reserve Chairman Jay Powell’s testimony. When Trump announced plans for a 25% tariff on steel and aluminum imports on his way to the Super Bowl, global markets barely flinched. This nonchalant reaction might suggest that the tariffs aren’t a pressing concern, but the truth is that markets are notoriously short-sighted and prone to mood swings. Like a hormonal teenager, Wall Street can shift from panic to euphoria in the blink of an eye, depending on the latest headlines.
The Hidden Dangers of Tariffs: Why The Threat Alone Can Cause Harm
Just because Wall Street isn’t sounding the alarm doesn’t mean the tariffs aren’t a real and present danger. As economist Claudia Sahm noted in a recent Bloomberg op-ed, even the mere threat of tariffs can stoke inflation. When consumers and businesses take these threats seriously, prices can rise even before the tariffs are officially implemented. This is precisely what appears to be happening. A recent survey by the Federal Reserve Bank of New York revealed that consumers expect inflation to rise to 3% over the next five years—the highest level since May. Meanwhile, a preliminary reading of U.S. consumer sentiment dropped to a seven-month low, driven by fears of higher prices.
Consumers Aren’t Buying the "So What?" Narrative
The “so what?” attitude might be popular in some circles, but American consumers aren’t buying it. They’re taking the threat of tariffs seriously, and their behavior reflects that. When people expect prices to go up, they tend to buy now rather than later—a phenomenon that became all too familiar during the pandemic. This shift in behavior can create a self-fulfilling prophecy: as demand increases, prices rise, reinforcing inflationary pressures. In other words, the tariffs’ impact isn’t just about economics; it’s about psychology. Expectations shape behavior, and behavior shapes reality.
The Chaos Is Real: How Trump’s Policies Impact the Economy
The “so what?” attitude also ignores the broader context of Trump’s policymaking style. The president’s first three weeks in office were marked by a barrage of chaotic announcements, from tariffs to bewildering foreign policy proposals, all designed to overwhelm and distract. While this approach might be politically strategic, it has real-world consequences. As Nick Pinchuk, CEO of toolmaker Snap-On, aptly put it, “Nobody knows what’s up. It’s like being on Space Mountain at Disney World. You don’t know where you’re going, but you’re pretty confident that you’re going to get to the right place at the bottom.” The problem is, we’re all along for the ride, and the eventual destination is far from certain.
The Bottom Line: Why We Shouldn’t Downplay the Tariff Threat
In the end, the “so what?” attitude toward Trump’s tariffs is a classic case of missing the forest for the trees. Just because Wall Street isn’t panicking right now doesn’t mean the tariffs aren’t a serious issue. The slow-burning nature of economic disasters, the psychological impact on consumers, and the unpredictable nature of Trump’s policymaking all point to one inescapable truth: the tariffs are not just a theoretical concern but a real and present danger. We’d do well to take them seriously, even if the markets are too distracted—or fatigued—to notice.
