Michael Strain struggles to see value in President Donald Trump’s recent economic pronouncements.

Trump’s campaign policy agenda had both pluses and minuses. While there were obvious flaws, much of what he wanted to do would have advanced prosperity. As recently as late January, I wrote that Trump seemed to be off to a good start. His approaches to AI and antitrust enforcement were promising, as were his commitments to expanding domestic energy production, eliminating harmful regulations, and cutting corporate taxes. Investors largely agreed with this assessment: the S&P 500 and the Nasdaq each hit all-time highs following Trump’s election in November, and stayed high well into February.

In recent weeks, Trump has reversed that good start. I fully endorse the goals of Elon Musk’s Department of Government Efficiency (DOGE) to reduce the scope of government activity and eliminate wasteful spending. But DOGE’s chaos has spooked consumers and investors. Worse, Trump’s on-again, off-again tariff increases and open hostility toward crucial trading partners (Canada, Mexico, and the European Union) have soured business and consumer sentiment, increased inflation expectations, chilled investment, and sent stocks plunging. …

… Why is Trump doing this? I’ll offer three explanations. First, we are witnessing rank incompetence. …

… Trump’s execution of trade policy has been equally incompetent. Many Trumpologists are trying to discern a strategy, as if the president were “playing five-dimensional chess.” He isn’t. There was no master plan, for example, behind his decision to enact a large tariff increase on Canada on March 4, then exempt automobile manufacturing on March 5, and then exempt goods in compliance with the United States-Mexico-Canada Agreement (USMCA) on March 6.

The second explanation is that Trump is a true mercantilist who genuinely, and wrongly, believes that if the US is running a bilateral trade deficit with another country, it must be losing economic value to that country. …

… But there is a third, more ominous explanation. It’s possible that Trump may have recently bought into the MAGA view that the US economy needs a fundamental, painful transformation.