What motivates President Donald Trump’s chaotic, stop-and-go, incoherent tariff moves? On April 9, a few days after his “reciprocal tariffs” had come into force and after worrying cracks appeared in financial markets including the market for Treasurys, he announced a 90-day pause for most “reciprocal tariffs” over 10%. He explained that people were “getting … a little bit afraid.” “I thought that people were jumping a little bit out of line. They were getting yippy.” In the end, he said, the pause “was written from the heart.” (“Why Did Donald Trump Buckle?” Financial Times, April 9, 2025.) Interestingly, Venezuela’s dictator Nicolás Maduro, who has run his country into the ground, said something similar: “I act out of love” (“Nicolás Maduro, Venezuela’s Contested President,” Financial Times, August 2, 2024).
If Trump’s apparent incoherence is not driven by love, is there some grand plan hidden behind it? Financial Times columnist Janan Ganesh argued that there is none: it is irrationality pure and simple. For example, he says, Trump pursues both the Maga goal of containing China and the “Liberation Day” goal of hitting imports from friendly countries (“The Hopeless Search for Trump’s Cunning Plan,” April 9, 2025). Ganesh concludes:
In the end, there are just too many contradictions in the Trump worldview to warrant any talk of a grand plan. … If strategy means anything, it is having a sense of the connectedness of things. There is none of that here.
The problem with this sort of hypothesis, although tempting in this case, is that it can explain everything and its contrary. It is safer—and more natural for an economist—to start with a rational choice framework, even if some qualifications are necessary. Like any individual in the ordinary course of life, Mr. Trump’s first goal is to further his own interest. This motivation is especially strong in politics. Mr. Trump’s preferences and interests incorporate an unusual need for recognition and a devouring lust for power. However, he appears to choose means that are ultimately inconsistent with his goals, that is, his instrumental rationality (as opposed to the logical coherence of transitive preferences) is defective. This is likely due to his deep ignorance of how society and the world work, something difficult to understand without economics. (If he becomes president for life, I will have to review my hypothesis of instrumental-rationality failures, and Gonesh will need to admit that the president did have a cunning grand plan.)
Individuals do make mistakes in their private affairs, but they have strong incentives to correct them. If one reaches the summit of the state, the cost of his mistakes is mainly borne by others, and his incentives to correct them are lower ceteris paribus. The more power he has, the more costly mistakes he can afford—or at least he thinks so.
The grand plans of states are typically nothing but what is in the rulers’ self-interest. A ruler’s self-interest requires that he rewards his more useful supporters, which are typically special interests and electoral contributors. A ruler’s need to satisfy the interests of useful supporters will often give his policies the appearance of incoherence. Moreover, a populist ruler tends to make his decisions “intuitively,” as Trump said he would do before he made exemptions for some electronics (“Trump Excludes Smartphones From Reciprocal Tariffs After Market Rout,” Financial Times, April 12, 2025). After all, the populist leader knows the truth in his guts, which are the guts of “the people” that he embodies. So much for the glorified state’s planning rationality. Yesterday, less than two days after pausing most of his tariffs for 90 days, Mr. Trump announced that the pause may not last that long anyway (“US Tech Tariff Exemption Will Be Temporary, says Trump,” Financial Times, April 13, 2025).
“This is starting to look more like stand-up comedy that ‘tariff policy,’” says Jose Pablo, a businessman and investor who frequently comments on this blog.
The idea that the current president’s trade spasms aim at making “deals” in favor of “his” people illustrates his ignorance of both economics and the minimal ethics required to maintain a free society. Imposing tariffs on another country amounts, in reality, to imposing a tax on one’s fellow citizens. When Trump repeats “What they charge us, we charge them,” he is really saying “What they charge their citizens or subjects, I charge mine.” He seems to intuitively recognize this when he makes exceptions. The moral error resides in the kidnapper’s deal: he kidnaps you and then offers you a deal, a ransom against your freedom. This “art of the deal” has been practiced by unchained Leviathans against their citizens, foreigners, or both.
Why don’t voters see all that or take so much time to discover it? One major explanation proposed by public choice theory lies in voters’ “rational ignorance.” Since the individual voter has no influence on an election result, he has no incentive to spend time and other resources gathering and analyzing political information (see also my Regulation piece “Mencken’s Theory of Democracy”).
The libertarian and classical liberal ideal mainly aims at constraining rulers and preventing them from doing harm. What has saved us for a few hundred years in many Western countries were the many strong institutions (“institutions” in the sense of both sets of rules or “norms,” and powerful countervailing groups) that ensured the decentralization of power. A widespread belief in individual liberty reigned. These factors protected us, even if imperfectly, against the will and whims of the people and its demagogues.
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READER COMMENTS
Atanu Dey
Apr 14 2025 at 10:23am
Excellent analysis. Thank you. You wrote:
I worry that at present if individuals don’t value individual liberty — therefore very little demand for liberty — will result in very little supply of individual liberty, if my understanding of basic economics is correct.
We have met the enemy, and it is us.
Pierre Lemieux
Apr 14 2025 at 10:49am
Atanu: Interesting remark! That is the question: How large is the demand for individual liberty–which includes the question, Who is “us”? Recall that, in the November election, Trump was elected with 49.8% of the votes. It is true that many of these voters were rationally ignorant. But so are many of the other 50.2%–most of whom anyway are not, to say the least, great defenders of individual liberty. One would have thought that if there was a country where a large demand for liberty subsisted, it would be America.
Have you read Buchanan’s Public Choice 2005 article, “Afraid to Be Free: Dependency as Desideratum”? He asks a question similar to yours.
Atanu Dey
Apr 15 2025 at 1:05am
Pierre:
Thank you for pointing me to Buchanan’s Public Choice 2005 article. I searched for it and found a reference to it in Don Boudreaux’s Dec 2004 post “Afraid to be Free?” on Cafe Hayek. I will definitely read it. I like the distinction made between paternalism and parentalism. I especially like Buchanan pointing out “that liberty carries with it responsibility. And it seems evident that many persons do not want to shoulder the final responsibility for their own actions. Many persons are, indeed, afraid to be free.”
This is consistent with my view about Indians that they are afraid to be free. The vast majority consider the government to be their mai-baap (which in Hindi means mother-father.) Now I have learned a new word for that: parentalism.
Thank you for helping in my continued education.
Pierre Simard
Apr 14 2025 at 10:40am
Pierre: My view of Trump’s strategy differs slightly from yours. I agree with the idea of rational ignorance, but I don’t believe Trump leaves the American public indifferent. Admittedly, as a Canadian, I’m far from the action. Anyway, I asked ChatGPT to translate the draft of a text I’m currently writing.
The Trump Logic: Immediate Political Gains at Any Cost
Behind the now-iconic slogan “Make America Great Again,” it would be naïve to believe that Donald Trump sincerely aims to restore the greatness of the United States. What he truly seeks, above all, is the consolidation of his personal power. The patriotism he brandishes like a banner is not an ideal, but a tool. A calculated performance in service of a far less noble goal: his own political dominance.
The decisions he makes — improvised trade wars, unilateral sanctions, dramatic withdrawals from international agreements — are regularly denounced by economists. Deemed counterproductive, even dangerous for global stability, they would appear irrational if assessed through the lens of the public good. But Trump isn’t playing that tune. He follows an implacable logic: that of immediate political gain, even at the cost of significant long-term economic losses.
This is the inner workings of his strategy. It’s not madness, but cold calculation. Faced with a tangible electoral gain today and a deferred economic setback, the choice is quickly made. This asymmetry between political short-termism and economic long-termism is at the heart of his method. Rising prices, disrupted supply chains, eroding international trust — those are problems for tomorrow. Today, what matters is the image — that of a president who “acts,” who defies the elites, who protects an America portrayed as under siege.
The sweeping tariffs are a perfect illustration of this. It doesn’t matter if they weaken American businesses or increase costs for consumers. The point lies elsewhere: strike hard, strike fast, make noise. Trump capitalizes on shock, not results. He plays on perception, not outcomes. The complexity of economic consequences — delayed and often technical — fades in the face of the immediate impact of his protectionist grandstanding.
But he doesn’t stop there. By invoking national security, he bypasses Congress to impose his trade decisions. He tramples on checks and balances with method: public attacks on judges, pressure on the Department of Justice, disdain for institutional norms. He undermines democratic safeguards because they get in the way. And this sabotage benefits him: less oversight means fewer obstacles on the path to increasingly personalized power.
Viewed through the lens of political analysis, Trump’s method is nothing extraordinary. Political actors have always tended to maximize their own interests, often at the expense of some hypothetical common good. But Trump takes this logic to the extreme. He is not the exception — he is its brutal embodiment.
And for now, it works. He monopolizes media attention, reinforces presidential authority, and energizes an electoral base hungry for protection, order, and revenge. But at what cost? His approach isolates the United States, weakens its economy, and chips away — brick by brick — at the democratic foundations on which the country rests.
Donald Trump is not an unpredictable president: he is a strategist of the present. A man willing to sacrifice the future to secure today’s applause. As long as this equation remains profitable, as long as voters respond to this theater of the moment, the authoritarian logic he embodies will continue to seduce — even if it ultimately dooms our shared horizon.
Pierre Lemieux
Apr 14 2025 at 11:06am
Pierre: Are you sure your critique is not addressed more to Ganesh than to me? When you write “What he truly seeks, above all, is the consolidation of his personal power,” I don’t see how this contradicts what I write. I do however, contrary to you, emphasize his intrumental-rationaly failures.
Since Trump is 78 years old, it is of course true that his time horizon is shorter than that of a 40-year-old dictator-to-be. And he probably does not believe (except politically) in the Christian God and the afterlife.
Craig
Apr 14 2025 at 12:05pm
“stop-and-go”
Well, one thing abiut DT is that he’s not dogmatic. He seemed to believe that America’s role as consumer was itself the indispensible role in global trade. But he has very quickly found out that the US is unequivocally import dependent and then +poof+ exemption…..and then he found out that America needs to borrow enormous sums from foreigners. Literally less than 2 hours after a treasury auctuon that saw extremely little foreign interest +poof+ trade war off…..except for China, except doh we need those computers and iphones…of course to me it looked like he was going to be trading income taxes for tariffs which seems like an extremely good idea to me, after all its like living with a permament recession, but I digress a but he got waylayed by fentanyl, Greenland, punitive tariffs, protectionist tariffs, revenue tariffs and some belief that simply mentioning the word ‘tariff’ would somehow impel Canada to forfeit its sovereignty to petition to join this cluster* of a ‘nation’
nobody.really
Apr 14 2025 at 4:22pm
Fair enough. By the same token, we have no reason to expect that efforts to thwart Trump’s goals would defend the public interest; we should expect such efforts to merely promote someone else’s own interest. Thus, this argument no reason to resist Trump’s goals.
Maybe rephrase?
Yes, the more powerful I am, ceteris paribus, the more likely that my actions will have consequences for you, for good or ill; that’s kind of the definition of “powerful.” But I think you overstate your case thereafter.
Imagine I make two mistakes: One has the effect of costing me $1 and costing you nothing. The other has the effect of costing me $2 and costing you $100. Even if we assume that I am indifferent to you, I have a greater incentive to correct the second mistake than to correct the first. The fact that you bear the bulk of the burdens of my second mistake is irrelevant to me because, by assumption, you are irrelevant to me. And if you become relevant to me (say, by remonstrating or seeking revenge), then the size of the burden put on you would give me additional reason to seek to correct that mistake. I don’t see a scenario where increasing burdens to you, ceteris paribus, would give me less incentive to correct a mistake.
And this is arguably one of the primary virtues of democracy: It does not eliminate the incentive of rulers to pander (perhaps no system does), but it expands the share of people to whom they must pander. True, often this pandering will take the form of symbolic gestures, ‘cuz they’re cheap. But isn’t symbolic compensation better than no compensation at all?
That’s not just a rhetorical question.
In Abundance, Ezra Klien argues that our glut of institutions hamstrings government’s ability to do (and especially to build) pretty much anything. If you understand the value of property rights as making a property owner’s world more predictable, then these institutions work; the status quo prevails. Klein argues that this much stability is choking us.
But while Klein argues that the current level of stability is “too much,” I don’t recall any specific articulation for how to strike the appropriate balance between stability and dynamism. If you didn’t know better, you might imagine Klein was praising Trump’s style of governing–boldly pursuing outcomes, blissfully unconstrained by institutions! If anyone is looking for a new topic to post about (or write a dissertation on), try articulating the appropriate balance.
David Seltzer
Apr 14 2025 at 6:12pm
Pierre: Considering rational ignorance; an individual voter refrains from searching for political information when the marginal cost of educating oneself about a politician exceeds the expected marginal benefit that information would provide. I suspect the cost is even higher now because of DJT’s golf ball in a tile room policies. If DJT does have a grand plan, the problem becomes one of adverse selection.
Pierre Lemieux
Apr 14 2025 at 6:37pm
David: I am not sure I understand your last two sentences. Could you elaborate?
David Seltzer
Apr 14 2025 at 7:40pm
Pierre: If Trump has a grand plan, and only he knows what the plan is, there is something of an information asymmetry. The asymmetry creates an adverse selection problem for voters and markets. I’m applying the reasoning used in insurance examples. I could be reaching here and misapplied the concept.
Pierre Lemieux
Apr 16 2025 at 9:48pm
David: The asymmetry of information is a good point. But, at first sight, I don’t think an insurance model is useful, because the asymmetry of information is not on the side of consumers (voters) but on the side of the producer (insurer/producer of “public services”).
The seller of snake oil knows what he sells and if 49.8% buys, they are swindled, but so are those who have not purchased. This is the relevant feature of the election: being exploited by a seller who has information that buyers and non-buyers don’t have.
Am I missing something?
David Seltzer
Apr 17 2025 at 10:40am
Pierre: “Am I missing something?” No. You are right. The insurance model is not useful. Thank you.
Mactoul
Apr 15 2025 at 12:08am
Bryan Caplan is no admirer of your traditional liberal politicians:
I make the same point –isn’t it better that a politician lies and blunders blatantly and clumsily?
nobody.really
Apr 15 2025 at 2:37am
“No high‑minded man, no man of right feeling, can contemplate the lumbering and slovenly lying of the present day without grieving to see a noble art so prostituted.
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No fact is more firmly established than that lying is a necessity of our circumstances — the deduction that it is then a Virtue goes without saying. No virtue can reach its highest usefulness without careful and diligent cultivation — therefore, it goes without saying that this one ought to be taught in the public schools — even in the newspapers….
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[Skillful lying is] the fourth Grace, the tenth Muse, man’s best and surest friend.”
Mark Twain, On the Decay of the Art of Lying (1885)
Mactoul
Apr 15 2025 at 1:11am
It is not self-interest that drives the truly great but a vision. Trump could have enjoyed his four years in comfort but he had a vision of tariffs. Hitler could have rested on his first six years of achievements but was driven by his vision of Eastern German territories.
Roger McKinney
Apr 15 2025 at 11:54am
There does seem to be a grand strategy. Trump doesn’t do a good job of explaining it.
https://geopoliticaleconomy.com/2025/04/10/trump-advisor-miran-tariff-pay-us-empire/
Trump has surrounded himself with yes men, which is dangerous. He honestly thought the world would see the wisdom in his tariffs. No one warned him that the bond market would throw a fit. They probably didn’t know. Trump understands finance and what the bond market’s message was. It completely surprised him. Now he knows that the financial world doesn’t like his tariffs. Hopefully, he will be less ambitious about them.
My wife often tells me not to attribute evil intentions to people when ignorance is a simpler explanation.
Monte
Apr 15 2025 at 4:59pm
Any sufficiently advanced incompetence is indistinguishable from malice. – Grey’s Law (a humorous variant of Clarke’s 3rd)