President Trump’s Paralyzing Uncertainty

“You know we have a treaty with Japan where if Japan is attacked, we have to use the full force and might of the United States. If we’re attacked, Japan doesn’t have to do anything. They can sit home and watch Sony television, OK?” Thus spoke Donald Trump witheringly just six months ago. But wait – on Friday he said, “We are committed to the security of Japan and all areas under its administrative control and to further strengthening our very crucial alliance,” adding later, after North Korea tested a ballistic missile, “The United States of America stands behind Japan, its great ally, 100 percent.”

All politicians contradict themselves, but rarely as often, as starkly, or on such crucial issues as Trump does. A looming danger is that by doing so, he continues to undermine the pro-business stance he’s trying to maintain. Uncertainty paralyzes, and he risks paralyzing four of the most important players in the U.S. Economy:

-The Fed. Vice chairman Stanley Fischer on Saturday cited “significant uncertainty” about Trump’s fiscal policy, which makes the Fed’s job harder. Reduced confidence about the Fed’s future actions spooks investors, executives, and consumers.

-Importers. Trump keeps threatening border taxes yet has said he dislikes the border-adjustment feature of House Speaker Paul Ryan’s proposed corporate tax overhaul, which might or might not (depending on which lobbyist you listen to) increase costs for importers. How can any executive make a confident decision about importing (or not) anything? That’s a giant issue right now for many major industries, such as autos.

-Companies that employ foreigners, especially if they’re Muslim or Mexican. That means every large business and quite a few small ones. It’s not that all employers oppose Trump’s executive orders on immigration, though many of them do. But the orders are vaguely written, subject to wide interpretation by officials and individual border agents, and in any case tied up in the courts for who knows how long with who knows what outcome. Some companies now refuse to send certain employees overseas, for fear they won’t be able to re-enter, and some foreigners refuse to travel to the U.S. As a result, the pace of business slows down.

-The health care sector. It’s arguably America’s largest industry, and many of its participants would be happy, in principle, to see Trump and Congress replace Obamacare. But with what? Trump has called for swift replacement but has no proposal, and Congressional Republicans can’t agree on one. A hospital trade group is already lobbying against Obamacare repeal. Everyone in the industry figures Obamacare in its present form is going, but no one has a clue what’s coming.

America needs a more pro-business Washington. And yes, uncertainty about future policy is eternal. But this is different; it’s uncertainty about fundamental plans for future policy. One result: less certainty, less confidence, less action. That’s bad for business.

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