America is at a crossroads. The Trump administration has to choose wisely.
That’s why a close Trump ally has warned about the one thing that could destroy America for good.
Stock Market Rebounds as Inflation Dips, Sparking Debate Over Tariffs and Tax Cuts
On Wednesday, major stock market indices staged a recovery after news broke that inflation dropped to an annual rate of 2.8% in February, down from 3.0% in January. The figure, lower than the anticipated 2.9%, fueled a rally that saw the NASDAQ climb 1.44% and the S&P 500 rise 0.81%. The Dow Jones Industrial Average, however, dipped slightly by 0.20%. This uptick followed weeks of declines driven by uncertainty over looming U.S. tariff hikes, lending credence to President Donald Trump’s assertion that his tariff policies would not ignite inflation, even as trade tensions with Canada and the European Union simmer.
The rebound came amid escalating trade disputes. The European Union announced a 25% tariff on $28 billion worth of steel and aluminum imports this week, retaliating against Trump’s tariffs on the bloc. Canada, meanwhile, is preparing to slap $20 billion in tariffs on U.S. goods in response to Trump’s increases targeting Ottawa. Just a day earlier, headlines warned of bear markets, vanishing savings, and an impending recession as the EU’s retaliatory measures took shape. Trump has wielded tariffs as leverage—particularly against Mexico and Canada—to push for policy shifts, including greater cooperation in curbing the flow of fentanyl into the United States.
Some of Trump’s allies brushed off the stock market swings as fleeting and unrelated to the tariffs’ long-term impact. “Wall Street fluctuates on a whim. I mean, the weather could be bad, and the markets will fall,” former Assistant Secretary of State Bobby Charles remarked Wednesday on the “John Solomon Reports” podcast. He dismissed the media frenzy and market reactions as “selective hysteria,” arguing that the situation doesn’t constitute a traditional trade war. “People need to understand this is not a trade war in the old sense… It’s a selective application of a limited tariff in order to get a policy outcome,” he explained.
Charles further downplayed inflation fears tied to tariffs. “Tariffs are not going to drive a wild inflation run, okay?” he said. “What causes inflation is when you overspend at the federal level by billions … that is driven by overspending on the part of the federal government. It is not driven by, you know, peripheral tariffs on things that we can actually make ourselves.”
Commerce Secretary Howard Lutnick echoed this optimism in a CBS News interview, calling the tariffs “worth it” despite market turbulence. He pinned any recession risk on past policies, stating, “The only reason there could possibly be a recession is because of the Biden nonsense that we had to live with.”
Former Trump economic advisor Steve Moore, also on the “John Solomon Reports” podcast, welcomed the inflation report. “There were a lot of worries. I think that this report alleviated some of them. I still think some of the hangover effects are from all the government spending that Biden did,” he said. He tied inflation pressures to excessive federal spending rather than trade policies. “All that government spending does put upward pressure on prices, since it’s all paid for by printing money,” he noted, adding, “But I was very happy with that inflation report. It was better than I expected. I want to remind your listeners that in the first term for Trump, you know, we had almost no inflation.”
Trade disputes are hardly a novelty, as Charles pointed out, citing a longstanding lumber spat with Canada. “We probably have globally going on here between the United States, our allies and others, ongoing trade conflicts that have to do with tariffs, probably two or three dozen of them, and they’ve been going on for decades,” he said. He referenced President Joe Biden’s 15% tariff on Canadian lumber, a response to Ottawa’s subsidies that artificially lower prices.
Moore chimed in, questioning the fairness of so-called “free trade” deals. “But one of the things Trump asked me to do is just look at some of these countries and their tariffs. You know, we have a free trade agreement with Canada, right?” he said. “And so if that’s the case, how is it that Canada is charging us over 100% on our dairy products and on our agriculture products. That doesn’t sound like free trade to me. And so when I look at what Canada is doing, I think that Trump has a point.”
Trump Economist Says Tax Cuts Most Important Issue Right Now For The Future Of The Economy
While tariffs dominate headlines, Steve Moore emphasized a more pressing economic priority: extending the 2017 tax cuts. “The most important thing we have to do this year, by far, is we have to make sure we get that tax cut done so we don’t have a $4 trillion tax increase on January 1. So that would just implode the economy if we have that happen,” he warned.
This statement zeroes in on a critical piece of Trump’s economic agenda—ensuring that American taxpayers avoid an overwhelming burden that could grind the economy to a halt. The 2017 Tax Cuts and Jobs Act slashed the corporate tax rate from 35% to 21% and doubled the standard deduction, changes Trump aims to lock in permanently. Yet, with Congress passing a continuing resolution to fund the government only through September 30, the path to enshrining these cuts remains uncertain.
Charles, meanwhile, framed tariffs as a tool to fulfill Trump’s pledge to revive U.S. manufacturing. “What Trump is doing is he’s bringing business back to the United States, because a foreign country that can use this labor that is not competitive with us, if they have to pay more for it, they actually will push their production over here to the United States. It also causes people to buy things,” he said.
As markets stabilize and inflation eases, the debate over tariffs and their economic fallout continues. Trump’s allies see them as strategic moves with manageable side effects, while critics warn of escalation. But for Moore, the real make-or-break issue lies elsewhere. Securing the tax cuts, he argues, is the linchpin to keeping the economy humming—far outweighing the tariff tussles in urgency and impact. With time ticking toward January 1, the stakes couldn’t be higher.
The Federalist Wire will update you on any major reports and news on the economy.
