Thread by @paulkrugman

The art of the flail: it seems as if Trump got spooked by market reaction to his tariffs, started to back down, then got furious over reports that he was backing down and reversed course again 1/ washingtonpost.com/politics/trump…

There are two aspects to this story. One is that Trump really is melting down at the first hint of adversity. The other is that this kind of behavior is arguably more damaging than straightforward protectionism 2/

The point is that while a stable protectionist regime makes an economy inefficient, it doesn't necessarily make it depressed. Fewer jobs in export industries, but more jobs in import-competing industries 3/

Case in point: Britain in the 1950s had high tariffs (>25 percent) dartmouth.edu/~dirwin/docs/w…

but low unemployment 4/

What depresses demand and employment is *uncertainty*. Businesses that depend on imports and/or foreign markets don't want to invest bc Trump might expand trade war' businesses that compete with imports don't invest bc he might not. 5/

So it's really bad to have a president whose policy is based on his fluctuating moods, which in turn depend on what he saw on TV a few minutes ago. And this effect may extend beyond trade. 6/

How many businesses will start to wonder whether Trump will "hereby declare" that something they spent billions on is no longer allowed? He doesn't really have that authority, but has a lot of power to muck things up 7/

And if he's reelected it will be completely unrestrained crony capitalism — except the potential cronies won't want to put money down just yet, in case he isn't. Erratic authoritarians are bad for business, and business may be figuring that out 8/