BIG

The stock market slides as Trump’s tariffs roil markets. Wall Street is terrified and mergers slow. Plus Capital One-Discover gets the green light, and Zuck lobbies Trump directly on antitrust.

My fourth point is commerce in the real economy is likely to slow sharply. Though jobs numbers are still pretty strong, that’s a lagging indicator and government layoffs are only starting to show up. Consumers are nervous, and with stock portfolios down and corporations slashing investment, demand will take a hit. Roughly half of spending comes from the wealthy in America, and they are the ones who can immediately cut expenditures, and will do so when stocks decline.

Finally, Republicans are going to start freaking out. Last week, multiple Republican Senators publicly said they do not support tariffs except as a bargaining ploy. Privately, the number is much higher. Top House and Senate Republicans believe that Trump will have to back down if things go badly, and things are going badly. One possible way to push back on Trump would be to use a Congressional resolution to void emergency declarations, but the specifics don’t really matter. Right now, Republicans are more scared of Trump voters than they are of Wall Street and the public, and Trump voters trust Trump. That will change when they feel the effects, but it could be too late.

There are a lot of follow-on consequences, like a sharp decline in mergers, a retrenchment of lending to less powerful firms, and increased importance of the Federal Reserve.