Over the weekend, it was reported that Donald Trump’s initial assurances of a more lenient approach to tariffs have been discarded, with the President reverting to stringent 20% tariffs across the board. Trump’s anticipated "Liberation Day" announcement is set to introduce universal tariffs on all imports to the U.S. from every country. This decision comes in conjunction with a 10% decline in the stock market over the past month—a situation attributed to the unpredictable nature of Trump’s tariff policies, which appear to be directing the U.S. economy towards a downturn. Amidst almost unanimous dissent from business leaders and economists, questions arise about the reasoning behind Trump’s detrimental decisions. On an NBC broadcast, Trump himself stated, “I couldn’t care less if car prices go up!”
The issue, however, seems to lie less with tariffs and more with Trump, as a survey from the Yale CEO Caucus indicates that 90% of CEOs support the strategic and selective use of tariffs. These leaders believe tariffs can be effective in addressing real trade imbalances and limiting foreign market intrusions that disadvantage U.S. producers in industries like steel.
Yet, these objectives are overshadowed by Trump’s apparent personal grievances and impulsive imposition of tariffs, which complicates decision-making for businesses looking to invest in the U.S. At present, over 12,500 tariff categories span 200 trading partners, with 107 instances of policy changes recorded in the last two months alone—a situation exacerbated by inconsistent guidance from Trump’s administration.
Businesses require consistency and stability, but frequent changes in trade policy have left companies unable to commit to long-term investments or hiring. During a recent Yale CEO Caucus event, CEOs reacted with dismay at repeated policy reversals, reflected by seven such incidents during a mere three-hour span.
Supporters of Trump argue these tactics are part of his negotiation strategy to unsettle counterparties. However, this has led to companies rebranding pre-existing spending plans as new U.S. investments, despite announcements of plans such as Foxconn’s $10 billion electronics factory in Wisconsin ultimately turning into unfulfilled projects. Foreign entities, meanwhile, find ways to sidestep tariffs, leading to the perception that 90% of CEOs now view Trump’s tariff policy as detrimental to the U.S.
Substantial evidence underscores the chaos caused by Trump’s tariff maneuvers: approximately $7 trillion has been wiped off the stock market since his presidency began, while real economic impacts include hindered U.S. manufacturing, harm to U.S. workers, surging inflation, plummeting consumer confidence, stagnant capital investment, and reduced GDP growth expectations.
Business leaders speculate about Trump’s motivations, considering his longstanding focus on tariffs and merchandise trade imbalances. Despite potential theories, including inducing a recession for political strategy, some suggest Trump acts on impulse, driven by narcissistic tendencies largely unconstrained by his advisers.
Psychologically, observers might liken these behaviors to Freud’s “death drive” in entrepreneurs—a tendency for self-destructive behavior connected to unresolved personal issues. Insights by Abraham Zaleznik describe how figures like Trump might be driven by past familial dynamics and an unfettered ego.
"Trump’s ‘Liberation Day’ has resulted in turmoil for U.S. businesses," it is suggested, with a need for the U.S. economy’s release from Trump’s erratic methodology, favoring a more strategic tariff management approach.
Jeffrey Sonnenfeld, Lester Crown Professor in Management Practice and Senior Associate Dean at the Yale School of Management, along with Steven Tian, the director of research, and Stephen Henriques, senior research fellow at the Yale Chief Executive Leadership Institute, contributed to the original commentary.
This commentary was initially published on Fortune.com.
