It never seems to rain but it pours these days for Donald Trump. This week, not one but two US courts ruled that he had misused emergency powers to impose tariffs on whatever took his fancy, thereby blowing a massive hole in what has been the signature policy of his second administration so far.
Last weekend, his Kremlin pal, President Putin, responded to his pleas for a Ukrainian ceasefire and peace talks by raining down scores of missiles and hundreds of drones on various Ukrainian cities.
On the frontline, meanwhile, he amassed tens of thousands of Russian troops on the border of that part of the Donetsk region in east Ukraine still not under Kremlin control (with 50,000 more poised to invade the country across its north east border).
So much for Trump’s campaign promise to end the war ‘on day one’.
Or, for that matter, in 100 days, a second self-imposed deadline announced after he took power which has also come and gone.
Far from being coaxed into peace talks by Trump’s charm offensive (which included constantly dissing Ukrainian President Zelensky as if he was the bad guy), the Russian dictator has rebuilt his war machine and primed it for a major summer offensive, all while playing Trump like a fiddle.
Matters are hardly going swimmingly on the domestic front either. The economy contracted a little in the first quarter, for the first time in three years, just as Trump was settling back into the Oval Office.
That’s not necessarily all his fault. But by moving tariffs up and down on a whim, and with more frequency than the elevators in Trump Tower, he has created the fog of uncertainty which now shrouds the US economy.
Naturally, business is holding back investment until it has a clearer view of the lie of the land. Consumers are avoiding major purchases because their pocketbooks are bare and they have very little savings in the bank. This explains why most major forecasters are downgrading their predictions for US economic growth this year and next to 2 per cent or less.
That’s not a disaster – and its likely more growth than most major European economies will enjoy over the next two years, including Britain. But it might be worse. Almost 70 per cent of Americans fear a recession. Four out of five US chief executives expect one in the next 12 to 18 months. Sometimes these sentiments can become self-fulfilling.
Not everything is going wrong. The jobs market is still robust, though unemployment is expected to creep up from the current 4.2 per cent to more than 4.5 per cent.
US stock markets, once Trump’s preferred metric for measuring success, have oscillated wildly, largely in response to whatever the President was doing with tariffs. The S&P 500, a broad index of US stocks, was down 14 per cent last month, the worst stock market performance in the first 100 days of a presidential term since Gerald Ford in 1974.
Since then it’s recovered somewhat and is now down under 3 per cent since Trump returned to power. Investors are holding their breath until they see what happens as the latest court rulings on tariffs inevitably wend their way to ultimate resolution in the Supreme Court.
Inflation is still above the 2 per cent target – but not by much. However tariffs, which are inflationary, don’t help – which is why word is seeping out from the Federal Reserve, America’s central bank, not to expect any more interest rate cuts before the autumn. The dollar has also declined under Trump 2.0, which adds to inflationary pressures.
All of this is taking its toll on Trump’s popularity – if not among his base, which is still pretty solid, then certainly with the wider public.
His positive economic approval rating was 45 per cent two months ago. It’s now 39 per cent; 61 per cent have a negative view. His overall approval rating fell to 40 per cent last month.
Only George W Bush had a worse rating at this stage in his second term (2005). Only 35 per cent of Americans think Trump’s second term will be a success, which is a lot less than voted for him last November.
Trump has had a signal success, however, with the one policy that did more than any other to re-elect him: the number of illegal migrants coming across the southern border with Mexico has plummeted to the lowest on record. Suddenly immigration is less of an issue in US politics. But returning those illegals already in America has proved more difficult.
Trump promised ‘millions and millions’ of deportations. But in the first three months of his administration, returns have been averaging only 13,000 a month, a run rate which amounts to a small fraction of the 430,000 Barack Obama managed to return in the first year (2013) of his second administration.
Trump has done himself no favours second time round by appointing a number of MAGA whack-jobs to key positions, such as Pete Hegseth (defence) and Howard Lutnick (commerce) — ‘the chief clowns in the clown car’, as one White House aide muttered to me.
But even Treasury Secretary Scott Bessent, supposed to be the grown-up in the room, often seems at a loss.
This matters because of the biggest threat of all to the Trump presidency: the bond markets, where governments go to borrow. Lenders are already charging the US a premium because of the eye-watering scale of the national debt ($36trillion) and because the country is hooked on persistent budget deficits over 6 per cent of GDP.
The cost of borrowing will only rise as Trump champions his ‘Big, Beautiful Bill’ which rolls over previous tax cuts and adds new ones, with only token cuts in federal spending.
It’s expected to add up to $4trillion more to the national debt and take annual deficits above 7 per cent of GDP. No wonder Moody’s, the credit rating agency, has stripped America of its remaining triple A rating and investors are now demanding around 5 per cent interest to lend long-term.
America will always be able to borrow. The question is: at what cost? The country is already paying around $1trillion a year in interest on the debt alone. That can only rise, big time, on the fiscal trajectory Trump has currently set for the country.
Elon Musk, of course, promised to cut spending by $2trillion a year during last year’s election campaign. That absurd figure was cut to a still ridiculous $1trillion after Trump won.
Now Musk has gone, his Department of Government Efficiency (DOGE) is claiming only $175billion in savings. Even that figure falls apart on scrutiny. I reckon bankable cuts amount to around only $70billion to date, a pittance in a $6trillion-plus federal budget.
Musk is now back with his troubled Tesla cars and Starship rockets. He now wears an ‘Occupy Mars’ T-shirt. The MAGA baseball cap has gone.
He has made no discernible difference to the deficit. He must now realise that cutting the federal leviathan down to size requires more than waving a chainsaw on a stage – and that maybe going to Mars is easier than curbing Washington profligacy.
Trump has time to change course. He could use the court rulings on tariffs as an off-ramp to ditch the whole tariff nonsense. That alone would reignite economic growth.
He could fan it further with targeted supply-side tax cuts and deregulation. But I fear he’s more likely to continue on his current course, which will see his Republican Party go down to defeat in next year’s mid-term elections, leaving him with two more years as a lame duck president confined by Congress.
Trump promised America a ‘new golden age’. We are still very far from that. It is, of course, a golden age for Trump and his family, who are using the spoils of office to enrich themselves with everything from a Qatari jumbo to cryptocurrency to Gulf property deals.
In all of that his presidency has been a conspicuous success.
But I suspect the American people were hoping for rather more than that.