Trump's business skills have always been his shield. They are now being challenged.
The typically optimistic Trump suggested over the weekend that he might not dismiss the chance of a full-blown recession, as his tariff policies could potentially trigger a significant global trade war.
TroibNews 
President Donald Trump has spent months during his campaign promising to guide the nation toward a prosperous economy. This week presents a pivotal challenge for him.
Over the weekend, Trump, typically optimistic about the economy, did not dismiss the possibility of a significant recession, as his tariff strategies threaten to ignite a global trade war that could elevate prices and further strain Americans' finances. His comments resulted in a sharp decline in the markets on Monday, with the Dow dropping over 400 points and both the S&P 500 and Nasdaq falling to their lowest points since September—just days after experiencing volatility related to his tariffs on Canada and Mexico.
Adding to the mounting pressure, congressional Republicans are engaged in a standoff with Democrats that could lead to a government shutdown by Friday.
These dynamics together could create one of the most significant economic challenges the country has faced since the Covid-19 pandemic, which significantly impacted the economy and contributed to the election of former President Joe Biden.
Trump seems to be signaling “at least the possibility that he’s not going to be deterred by market volatility, he’s not going to be deterred by falling stock prices, and that he might not even be deterred by an economic downturn,” according to Michael Strain, director of economic policy studies at the American Enterprise Institute. “That is new for him.”
While economic instability in the U.S. predates Trump’s second term—playing a crucial role in his political comeback—these recent economic pressures stem largely from his own policies and will challenge his willingness to endure short-term economic difficulties and political backlash with the hope of longer-term economic benefits.
“His antics have been very painful. At least he’s acknowledging that there’s pain,” remarked a source close to the administration, who spoke on condition of anonymity. “I don’t quite get it because in the first administration he judged himself every day by the stock market. He has now chosen to judge himself by something else—I don’t know what it is.”
Polling indicates that Americans are dissatisfied with the current economic situation and increasingly attribute the blame to Trump. A Reuters-Ipsos poll conducted last week revealed that 51 percent of respondents believe the economy is heading in the wrong direction, while only 31 percent think it’s on the right track. Additionally, 49 percent disapprove of Trump’s management of the economy, compared to 39 percent who approve.
“He has to acknowledge there’s going to be some pain. He can’t say everything’s perfect. If he said everything’s perfect, people would think he lost his mind,” the source added. “You can’t be totally that out of the picture, and say, ‘Everything's great, everything's fine, everything I'm doing is working,’ and have the market down 2 to 3 percent every day.”
An anonymous White House official downplayed the immediate impact of "animal spirits"—the emotional factors affecting markets and consumer confidence—pointing instead to other indicators that they believe will reflect the long-term success of their policies. The official cited the Conference Board Measure of CEO Confidence, which reported that CEO confidence in the first quarter of 2025 was at its highest in three years.
Nonetheless, the official conceded that the measures being taken by the administration—from federal government cuts to reciprocal tariffs—will pose challenges in the short run.
"We're drawing a distinction here between short-term disruption and longer-term, more sustainable healthy economic growth that's led by the economic sector but not the private government," the official stated. "There was a lot of damage to be undone. It's hard to rip the Band-Aid off without getting some blood everywhere. It's setting that short-term expectation to be reasonable."
Recently, Trump has oscillated between his typical economic optimism and a more realistic evaluation of the short-term outlook, seemingly recognizing that immediate economic relief isn’t forthcoming.
"We're starting to see 'nerves in markets, nerves among employers and—outside the economics—nerves from Republicans on the Hill,'” commented Daniel Hornung, a former deputy director of the National Economic Council for Biden.
The administration's messaging around tariffs poses challenges, given that rising prices on foreign goods is part of the strategy. Without this effect, there’s limited motivation to shift production back to the U.S.
"The way to tell whether it works is if the prices are going up for the goods that you’re putting tariffs on,” explained Neil Dutta, head of U.S. economic research at Renaissance Macro Research. “They’re all about, 'Well you know inflation doesn’t really go up with tariffs. The dollar absorbs it.' What they’re really saying is, they don’t work. That’s another way of saying it doesn’t work. If it’s not raising consumer prices... you’re basically telling me it’s not as effective as you say it is.”
During his recent joint address to Congress, Trump barely touched on the economy, except to briefly lament the “total mess” he claims to have inherited from Biden and the “out-of-control” egg prices. His economic strategy outlined during this address—focused on reducing energy costs, attracting domestic business investment, and cutting government expenditure—is a long-term plan that appears to provide no immediate relief for Americans facing high prices.
Indeed, he recognized that his tariffs could exacerbate issues in the short term, cautioning of a “little disturbance” but assuring it “won’t be much.” This was a sentiment echoed by White House press secretary Karoline Leavitt, who stated that the president “was realistic” and “level set with the American people.”
However, on Friday, Trump reverted to a more optimistic tone during an impromptu press conference, highlighting the February jobs report, which indicated the U.S. added 151,000 jobs, and noted a “manufacturing turnaround” with 10,000 new manufacturing jobs created. He promised that more jobs would follow from the over $1.7 trillion in investments announced since his inauguration.
Yet just two days later, Trump’s outlook seemed to darken during an interview with Fox Business’s Maria Bartiromo, where he mentioned a “period of transition” following the implementation of the tariffs and refrained from excluding the possibility of a recession.
“We're bringing wealth back to America. That's a big thing… it takes a little time, but I think it should be great for us,” Trump remarked.
This economic uncertainty arises as Trump’s tax cut plans have taken a backseat due to the looming threat of a government shutdown. Allies of Trump have cautioned that failing to extend the 2017 tax cuts would effectively mean a substantial tax increase that could destabilize the U.S. economy.
Trump's advisers have taken to the media to soothe market anxieties and investors' concerns, with Kevin Hassett, a senior economic adviser, asserting that the administration views the tariffs as a strategy to win "a drug war, not a trade war," against Canada and Mexico.
Similarly, Commerce Secretary Howard Lutnick attempted to reassure the public on "Meet the Press" by asserting that tariffs would help “grow our economy in a way we’ve never grown before” and that U.S. citizens should not brace for a recession.
However, this message conflicts with a different viewpoint within the administration held by White House trade adviser Peter Navarro, who regards tariffs not merely as tools for bargaining but as critical for protecting domestic industries.
This philosophy is encapsulated in Trump’s commitment to implement reciprocal tariffs on all countries starting April 2, a stance that has remained unchanged despite recent economic turmoil.
By Sunday evening, Trump was back to expressing positivity about the tariffs.
“I think the tariffs are going to be the greatest thing we've ever done as a country,” Trump stated to reporters on Air Force One. “It's going to make our country rich again.”
Meanwhile, the Federal Reserve is not in a hurry to lower interest rates as it waits to evaluate how Trump’s tariff policies will unfold. Fed Chair Jay Powell indicated during a New York conference that the central bank is also observing how the administration's immigration, fiscal, and regulatory policies develop.
“The economy is fine. It doesn't need us to do anything, really,” Powell noted.
Economists at Bank of America have suggested that the likelihood of stagflation—characterized by high inflation and stagnant economic growth—has increased. While this isn't their primary projection, they believe that the "soft landing" many had anticipated for the economy "seems unlikely in the near term."
"Weak survey data, soft consumer spending, large tariff increases, and Department of Government Efficiency cuts have weighed on the growth outlook in recent weeks," stated Candace Browning, head of BofA Global Research, in a research note on Sunday.
The source close to the administration noted that the optimism many business leaders felt when Trump took office—reflected by the subsequent market rally—has dissipated. Unlike his first term, they highlighted, there seems to be no one ensuring that Trump is meeting regularly with CEOs who could emphasize the gravity of the economic situation.
“I get calls from CEOs every day saying, ‘How do we get in to talk to him?’” the source concluded.
Rohan Mehta for TROIB News
Over the weekend, Trump, typically optimistic about the economy, did not dismiss the possibility of a significant recession, as his tariff strategies threaten to ignite a global trade war that could elevate prices and further strain Americans' finances. His comments resulted in a sharp decline in the markets on Monday, with the Dow dropping over 400 points and both the S&P 500 and Nasdaq falling to their lowest points since September—just days after experiencing volatility related to his tariffs on Canada and Mexico.
Adding to the mounting pressure, congressional Republicans are engaged in a standoff with Democrats that could lead to a government shutdown by Friday.
These dynamics together could create one of the most significant economic challenges the country has faced since the Covid-19 pandemic, which significantly impacted the economy and contributed to the election of former President Joe Biden.
Trump seems to be signaling “at least the possibility that he’s not going to be deterred by market volatility, he’s not going to be deterred by falling stock prices, and that he might not even be deterred by an economic downturn,” according to Michael Strain, director of economic policy studies at the American Enterprise Institute. “That is new for him.”
While economic instability in the U.S. predates Trump’s second term—playing a crucial role in his political comeback—these recent economic pressures stem largely from his own policies and will challenge his willingness to endure short-term economic difficulties and political backlash with the hope of longer-term economic benefits.
“His antics have been very painful. At least he’s acknowledging that there’s pain,” remarked a source close to the administration, who spoke on condition of anonymity. “I don’t quite get it because in the first administration he judged himself every day by the stock market. He has now chosen to judge himself by something else—I don’t know what it is.”
Polling indicates that Americans are dissatisfied with the current economic situation and increasingly attribute the blame to Trump. A Reuters-Ipsos poll conducted last week revealed that 51 percent of respondents believe the economy is heading in the wrong direction, while only 31 percent think it’s on the right track. Additionally, 49 percent disapprove of Trump’s management of the economy, compared to 39 percent who approve.
“He has to acknowledge there’s going to be some pain. He can’t say everything’s perfect. If he said everything’s perfect, people would think he lost his mind,” the source added. “You can’t be totally that out of the picture, and say, ‘Everything's great, everything's fine, everything I'm doing is working,’ and have the market down 2 to 3 percent every day.”
An anonymous White House official downplayed the immediate impact of "animal spirits"—the emotional factors affecting markets and consumer confidence—pointing instead to other indicators that they believe will reflect the long-term success of their policies. The official cited the Conference Board Measure of CEO Confidence, which reported that CEO confidence in the first quarter of 2025 was at its highest in three years.
Nonetheless, the official conceded that the measures being taken by the administration—from federal government cuts to reciprocal tariffs—will pose challenges in the short run.
"We're drawing a distinction here between short-term disruption and longer-term, more sustainable healthy economic growth that's led by the economic sector but not the private government," the official stated. "There was a lot of damage to be undone. It's hard to rip the Band-Aid off without getting some blood everywhere. It's setting that short-term expectation to be reasonable."
Recently, Trump has oscillated between his typical economic optimism and a more realistic evaluation of the short-term outlook, seemingly recognizing that immediate economic relief isn’t forthcoming.
"We're starting to see 'nerves in markets, nerves among employers and—outside the economics—nerves from Republicans on the Hill,'” commented Daniel Hornung, a former deputy director of the National Economic Council for Biden.
The administration's messaging around tariffs poses challenges, given that rising prices on foreign goods is part of the strategy. Without this effect, there’s limited motivation to shift production back to the U.S.
"The way to tell whether it works is if the prices are going up for the goods that you’re putting tariffs on,” explained Neil Dutta, head of U.S. economic research at Renaissance Macro Research. “They’re all about, 'Well you know inflation doesn’t really go up with tariffs. The dollar absorbs it.' What they’re really saying is, they don’t work. That’s another way of saying it doesn’t work. If it’s not raising consumer prices... you’re basically telling me it’s not as effective as you say it is.”
During his recent joint address to Congress, Trump barely touched on the economy, except to briefly lament the “total mess” he claims to have inherited from Biden and the “out-of-control” egg prices. His economic strategy outlined during this address—focused on reducing energy costs, attracting domestic business investment, and cutting government expenditure—is a long-term plan that appears to provide no immediate relief for Americans facing high prices.
Indeed, he recognized that his tariffs could exacerbate issues in the short term, cautioning of a “little disturbance” but assuring it “won’t be much.” This was a sentiment echoed by White House press secretary Karoline Leavitt, who stated that the president “was realistic” and “level set with the American people.”
However, on Friday, Trump reverted to a more optimistic tone during an impromptu press conference, highlighting the February jobs report, which indicated the U.S. added 151,000 jobs, and noted a “manufacturing turnaround” with 10,000 new manufacturing jobs created. He promised that more jobs would follow from the over $1.7 trillion in investments announced since his inauguration.
Yet just two days later, Trump’s outlook seemed to darken during an interview with Fox Business’s Maria Bartiromo, where he mentioned a “period of transition” following the implementation of the tariffs and refrained from excluding the possibility of a recession.
“We're bringing wealth back to America. That's a big thing… it takes a little time, but I think it should be great for us,” Trump remarked.
This economic uncertainty arises as Trump’s tax cut plans have taken a backseat due to the looming threat of a government shutdown. Allies of Trump have cautioned that failing to extend the 2017 tax cuts would effectively mean a substantial tax increase that could destabilize the U.S. economy.
Trump's advisers have taken to the media to soothe market anxieties and investors' concerns, with Kevin Hassett, a senior economic adviser, asserting that the administration views the tariffs as a strategy to win "a drug war, not a trade war," against Canada and Mexico.
Similarly, Commerce Secretary Howard Lutnick attempted to reassure the public on "Meet the Press" by asserting that tariffs would help “grow our economy in a way we’ve never grown before” and that U.S. citizens should not brace for a recession.
However, this message conflicts with a different viewpoint within the administration held by White House trade adviser Peter Navarro, who regards tariffs not merely as tools for bargaining but as critical for protecting domestic industries.
This philosophy is encapsulated in Trump’s commitment to implement reciprocal tariffs on all countries starting April 2, a stance that has remained unchanged despite recent economic turmoil.
By Sunday evening, Trump was back to expressing positivity about the tariffs.
“I think the tariffs are going to be the greatest thing we've ever done as a country,” Trump stated to reporters on Air Force One. “It's going to make our country rich again.”
Meanwhile, the Federal Reserve is not in a hurry to lower interest rates as it waits to evaluate how Trump’s tariff policies will unfold. Fed Chair Jay Powell indicated during a New York conference that the central bank is also observing how the administration's immigration, fiscal, and regulatory policies develop.
“The economy is fine. It doesn't need us to do anything, really,” Powell noted.
Economists at Bank of America have suggested that the likelihood of stagflation—characterized by high inflation and stagnant economic growth—has increased. While this isn't their primary projection, they believe that the "soft landing" many had anticipated for the economy "seems unlikely in the near term."
"Weak survey data, soft consumer spending, large tariff increases, and Department of Government Efficiency cuts have weighed on the growth outlook in recent weeks," stated Candace Browning, head of BofA Global Research, in a research note on Sunday.
The source close to the administration noted that the optimism many business leaders felt when Trump took office—reflected by the subsequent market rally—has dissipated. Unlike his first term, they highlighted, there seems to be no one ensuring that Trump is meeting regularly with CEOs who could emphasize the gravity of the economic situation.
“I get calls from CEOs every day saying, ‘How do we get in to talk to him?’” the source concluded.
Rohan Mehta for TROIB News
