Over the weekend, Donald Trump’s reassurance of a more generous approach to tariffs was reversed again, apparently returning to draconian across-the-board 20% tariffs. The president’s imminent Rose Garden “Liberation Day” announcement of universal tariffs on everything coming into the U.S. from everyone—accompanied by the Trump-driven 10% decline in the stock market over the last month—is just the latest example of how Trump’s capricious tariff tantrums are steering the U.S. economy straight off the cliff. Given the near unanimous chorus of business leaders and economists, one must wonder what motivates Trump’s destructive decrees. As Trump himself confessed this weekend on NBC, “I couldn’t care less if car prices go up!”
The problem is not tariffs—the problem is Donald Trump, plain and simple. Per our Yale CEO Caucus survey results, 90% of CEOs actually support tariffs, when they are used strategically and selectively. These business leaders support the use of selective tariffs to rectify genuine trade imbalances and constrain foreign dumping into the U.S., undermining U.S. producers in sectors such as steel.
But these worthy goals often seem to be subjugated to Trump’s personality-driven vendettas, such as punishing longtime nemesis Justin Trudeau; and even more importantly, Trump’s idiosyncratic, capricious rollout of tariffs has made it all but impossible for companies to invest at all, hampering Trump’s own stated goal of bringing investment and jobs back to the U.S.
Already, there is a confusing array of 12,500 tariff categories across 200 trading partners. We tallied up Trump’s tariff pronouncements over the last two months and found no less than a head-spinning 107 instances of paradoxical flip-flops on tariff policy, often with same-day reversals. That does not even account for often contradictory guidance from Trump’s deputies, which are then subsequently overruled by Trump himself.
Businesses need predictability and stability; no company can authorize billions in capital spending to build new plants or hire new workers when trade policy changes not day by day, not hour by hour, but in some cases, literally minute by minute. During our Yale CEO Caucus this month, CEOs groaned and cringed each time CNBC’s Eamon Javers read off a new tariff policy reversal, with seven flip-flops over our three-hour event.
Trump’s defenders argue this is all part of his “art of the deal”—to punch counterparties in the face so hard that they are knocked off balance and are all but begging for a deal. But the reality is, Trump is getting snookered in these deals, as companies merely repackage existing and preplanned capex spending into gauzy, headline-drawing “announcements” of “new investments” in the U.S. The veneer of glitz and glamour of fawning Oval Office press conferences announcing these new investments hides a much seamier reality, as much-ballyhooed new “investments” such as Foxconn’s planned $10 billion electronics factory in Wisconsin turn into abandoned shadows and idled plants. Meanwhile, foreign leaders and companies offer token concessions with little genuine benefit to the U.S., while racing to evade tariffs by rerouting supply chains through neutral countries, brazenly and openly defying Trump while paying lip service to his whims. That is why 90% of CEOs polled at our Yale CEO Caucus said that Trump’s tariffs are backfiring on the U.S.
These CEOs, like everyone else, are looking at ample data pointing to the widespread havoc wrought by Trump’s tariff tantrums. Not only have Trump’s botched tariff tantrums helped chop about $7 trillion in value off the stock market since his inauguration—enough to fund the government for an entire year—but the costs are being felt in the real economy. Far from bringing manufacturing and jobs back to the U.S., Trump is killing American manufacturing, hurting U.S. workers, and bringing the entire U.S. economy down with him. Inflation expectations have jumped to 32-year highs; consumer confidence has plunged 25% across both the University of Michigan and Conference Board surveys as consumer spending falls the most in five years; NFIB Small Business confidence has plunged 50%; the labor market is deteriorating as the number of new layoffs quadrupled over the last three months; capital spending and investments have come to a standstill; and GDP growth forecasts have come down by 1%—a head-spinning reversal of economic fortune as the initial euphoria of Trump’s pledges of tax cuts and deregulation morphed into the Frankenstein monster of all tariffs, all the time.
Of course, many business leaders wonder what motivates Trump’s destructive tariff tantrums. On one hand, Trump has obsessed over tariffs since at least the 1980s; and he has long, reductionistically viewed the U.S. balance of trade as if he were still running the Trump Organization, which tries to sell more than it buys every year. But the sheer, avoidable, intentional chaos of Trump’s tariff rollout, and his willingness to ignore significant stock market drawdowns, suggest there may be other explanatory factors. Some CEOs have privately suggested that Trump may be trying to induce a recession early in his term to “clear the deck” well before midterm elections—though that assumes a greater facility for long-term strategic foresight than is usually associated with Trump. More likely, perhaps Trump has no plan and is just making things up on the fly, with arbitrary megalomaniacal impulses unconstrained by yes-men staff.
In Trump’s tantrums, psychoanalysts might find strong resemblance to what Sigmund Freud called the “death drive” pathology of entrepreneurs, or what psychiatrists term the self-destructive impulse—akin to a child on the beach who builds a beautiful castle and kicks it down.
Forty-two years ago, Abraham Zaleznik, a psychoanalyst management scholar at the Harvard Business School, explained that many times, such entrepreneurial leaders as Trump and Musk are driven by an ultimately self-destructive megalomania, rooted in a bad relationship with a parent who disparaged them but is no longer around to be proven wrong. Zaleznik stated, “In their climb to the top, they have certain fantasies having to do with creating a new world. There is a search for restitution—to remake the world, remake their childhood, remake a relationship with a parent. They fall prey to the Midas theory. Everything they touch will turn to gold, and if it doesn’t they go bonkers. I think if we want to understand the entrepreneur we should look at the juvenile delinquent. I think there are a lot of similarities. They both have an under-developed super-ego. And so they don’t understand right from wrong.”
Trump’s “Liberation Day” has turned into a nightmare for U.S. businesses. The real liberation the U.S. economy needs is a more orderly, strategic approach to tariffs, liberated from Trump’s idiosyncratic whims.
Jeffrey Sonnenfeld is the Lester Crown Professor in Management Practice and president and founder of the Yale Chief Executive Leadership Institute. Steven Tian is the director of research at the Yale Chief Executive Leadership Institute. Stephen Henriques is a senior research fellow at the Yale Chief Executive Leadership Institute and a former McKinsey & Co. consultant.
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