Hubris is defined by wikipedia as “a personality quality of extreme or foolish pride or dangerous overconfidence, often in combination with arrogance.” Most of the people I know have a bit of a problem with pride and arrogance, especially including the guy I see in the mirror. But most people try to keep that under control since it’s not particularly attractive to those around us whose favor and company we seek. Mr. Trump goes over the cliff of pride deep into hubris, something that can be costly to him and unfortunately to us.

Friday’s tirade on twitter was pretty much over the top, even for Mr. Trump. Asking whether Jerome Powell, the Chairman of the Board of Governors of the Federal Reserve (our nation’s central bank) was a bigger enemy than China’s communist party leader, Xi Jinping (a man who is responsible for persecuting Christians and practicing some levels of ethnic/cultural cleansing with the Uighur’s) is beyond obscene. And Mr. Trump’s criticism of Mr. Powell? That he is only giving Mr. Trump 0% real interest rates? When the rest of the world gets negative (nominal and real) interest rates? But then Mr. Trump adds insult to injury by ordering U.S. companies to plan to leave China. Does he think that he, like Xi Jinping, is a dictator and can just order firms to do whatever he wants? Apparently he does.

His tirade and subsequent additional tariffs on China led to a sharp stock market drop on Friday, and then we had his “second thoughts” on tariffs over the weekend, and this morning we get the White House saying trade talks with China are back on! Markets are perking up a bit on the news, the flight to gold is down a bit–seems like markets are asking for a breather. The question before us is will this help or hurt the president in his re-election? No matter what you think of him, Mr. Trump is consistently trying to shake up the status quo in pursuit of what he wants. At one level that is a very good thing–the entrenched status quo is very tough to beat, especially when the beneficiaries of the status quo know they can wait you out. But making an omelette every time you see a few eggs is a terrible strategy, and picking which battles is critically important.

Mr. Trump leaps from mere pride to hubris on trade with China precisely because he seems to take no counsel. Reports suggest that almost all his cabinet members are against the trade war he insists is a “good thing and easy to win” yet he presses ahead. As we’ve written about previously, Mr. Trump is right to confront China on its theft of intellectual property and forced surrender of IP to do business in their country. But as Dan Griswold of CATO says,

The Trump administration’s escalating tariff war is inflicting more damage on the U.S. economy than anything the Chinese government has done. 

Mr. Trump is looking increasingly desperate, almost like a wild animal trapped in a corner. He insists the economy is great, but then rails on the Fed chairman as an enemy of the state for his tight monetary policy (which is more like an open spigot when considered from a historical perspective). For sure he should be credited with creating a different business climate upon his election. His deregulatory approach (most important in my mind) and his tax cuts (slightly less important) sent a new signal that America was back in business. Main street markets finally perked up after their long slumber, and now everywhere you look you see help wanted signs, increasing low-skilled labor wage rates, with record low unemployment in the most vulnerable classes of workers. Yet the economy is slowing, and virtually every business report that reflects global business conditions suggest his trade policies are creating uncertainty that is precluding the long-term investment the economy needs to stay strong. My personal fear is that Mr. Trump does not know how right he is–China’s economy is much more vulnerable to the trade war than we are. I don’t think he realizes the extent of the collateral damage when their bubble economy implodes; and he has foolishly given the Chinese government an external enemy to blame for their own mismanagement. And while we aren’t that big a trading partner with China, we are with Europe and Europe is with China–we can’t escape the implications of a global economy. Nor should we want to try.

But back to his desperation. As most political analysts understand (to include Mr. Trump as well as the Democratic party), Mr. Trump’s election was due not to anything related to Russia but precisely his picking up disaffected white working class voters in Wisconsin, Pennsylvania and Michigan. A slowing economy and a renewed Democratic focus in those areas could cost him the election. The economy’s growth is still strong, but slowing at precisely the wrong time–hence his unprecedented public attacks on the Federal Reserve. This provides him both a scapegoat if the economy turns south and will at some margins work to pressure the Fed to ease. It seems like China’s leadership is prepared to wait him out, thinking the election timetable is in their favor. And Mr. Trump is determined to not allow that–hence his ratcheting up the pressure. He seems to think if he can get a trade deal quick, and then have the Fed goose the money stock through the next six months, he’ll be fine for the election. And he may be right. But I suspect he needs not only a good U.S. economy; paradoxically (to him) he also needs a good Chinese economy to get the robust global growth which will help U.S. growth. He’ll only succeed when everybody succeeds, and I’m afraid he doesn’t understand this. If only he could listen to counsel.

Without counsel plans fail, but with many advisers they succeed.