Trump Is Dumb. Is Wall Street Even Dumber?
He may be a political opportunist with a general disinterest in the mechanics of policy and governance, but if you spend even a small amount of time listening to Trump, or know his long history of spouting off on politics, you know he does have a few long-standing core beliefs. One is that immigrants ruin America. Another is that Black people are criminals. And a third is that tariffs are beautiful. For decades, first as a private citizen and then as a politician, Trump has consistently and enthusiastically touted tariffs as an economic cure-all that will revitalize the many towns and cities that have never recovered from America’s transition to a postindustrial economy, making the country unimaginably rich—and without anyone having to pay taxes.
Maybe our hypothetical trader isn’t really into research and doesn’t really care about what Trump said about tariffs when Ronald Reagan was president—or even what he said on the campaign trail, or in his inauguration speech (“Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens”). This trader lives for the volatility of the moment and only really cares about what’s coming down the pike right now. And maybe, if he’s fast enough on the draw, he can make those trades quickly enough to capitalize on the gains made by everyone else who is buying the upswing from Trump’s latest reversal.
It’s possible, of course, that Trump’s latest tariffs would have triggered a sell-off, albeit a more gradual one, even if they had been anticipated. But Wall Street—where the job is literally to assess risk—was particularly blindsided, so much so that Bill Ackman, a billionaire hedge fund manager and one of Trump’s most prominent online defenders, apologized for misjudging the president. I “assumed economic rationality would be paramount,” he tweeted in a post that warned of a coming “economic nuclear winter.” Has he paid even the slightest attention to Trump’s statements about tariffs? Has he listened to Trump’s economic team defend those tariffs? There is no “economic rationality” to speak of. These people are morons. And so, it seems, are the denizens of Wall Street.
