Following the President's recent tweets about Amazon and news of a growing trade war with China, stocks slid on Tuesday and Wednesday morning.
While the stock market rebounded on Wednesday afternoon, more rocky days are likely. Without any advisers in the Oval Office who are willing or capable to say "Stop!" to the President, the situation is likely to deteriorate if there are more tweets about major American companies or trade battles overseas.
The tweets about Amazon -- making anti-trust a political battering ram -- have converged with Trump's aggressive moves to increase tariffs. He started by announcing new tariffs on aluminum and steel. He then set his sights on Asia when the administration released a list of 1,300 Chinese exports that would face 25% tariffs. Now, as the war of words escalates, China has announced plans to impose a 25% tariff on $50 billion worth of exports
While the President tweeted that "we are not in a trade war with China"
and Sarah Sanders assured reporters that this was simply some "short term pain," most economists are unlikely to find calm in the storms. Mark Zandi, the chief economist at Moody's Analytics, predicts that 190,000 jobs will be lost as a result of the trade war.
This week has moved President Trump into a political red zone. Until now, the President has also generated strong support within the corporate sector, which has been pleased with his mix of tax cuts and deregulation. Trump can kick and scream all he wants, but as long as the bottom line is good, many business and financial leaders could very well be willing to turn a blind eye toward the bullying and bombast.
But now the tweet-storms are encroaching into dangerous territory for the President. His tirades are starting to spook the markets and to trigger retaliatory tariffs that can have a damaging economic impact.
The potential trade wars with China can fall hardest on voters in states like Wisconsin, Ohio and Iowa that are at the heart of his coalition. Farmers in Ohio, for instance, are major producers of pork and apples -- both now the target
of China's planned retaliatory tariffs on the United States.
If the Trump base starts to suffer too much, the frustration that led these voters to support him could move them toward another candidate. Trump is threatening to get rid of NAFTA, which would be another huge blow to free trade.
Support from Republicans outside of Trump's core base -- those who would have preferred another Republican candidate -- remains strong, but could easily start to thin.
More than anything else, as was evident with the resignation of Gary Cohn (who refused to step down even after Charlottesville), this might convince the corporate world to start looking for a new president.
For a Republican whose support is so fragile, corporate opposition could be devastating. In response to the Amazon tweets, the executive vice president of the Chamber of Commerce fired back by saying: "It's inappropriate for government officials to use their position to attack an American company."
Although there are ongoing negotiations to resolve these issues, such as saving NAFTA, the President is getting in the way. The tweets and statements are causing damage that can be hard to undo. It is unclear whether President Trump has the capacity or the will to renege on his supporters on these issues, given the tensions that have already emerged over the omnibus spending bill.
Many of President Trump's strongest supporters currently suffer from the same overwrought confidence that Hillary Clinton's supporters exhibited in 2016. They see a Teflon politician for whom nothing can go wrong. Yet, as Clinton's supporters discovered on election night, no one is invincible on the campaign trail. In this case, the tweets that have consumed so much of our attention since January 2016 could very well be the key that opens the door to a new leader in 2020.