President Donald Trump's chaotic behavior can make financial markets gyrate any moment — and, given his split-personality constituency, likely will do so through Election Day 2020.
Trump pushed the Dow up nearly 400 points on Tuesday with a simple announcement: His administration will postpone additional tariffs on Chinese imports that would have hiked prices on popular consumer goods. The threat of those tariffs had helped drive markets down nearly 400 points on Monday.
A wave of relief swept through corporate America, which had warned the tariffs might trigger a recession. No president wants to face voters in an economic downturn.
But if that were Trump's only concern, he never would have pursued his haphazard trade policy in the first place. It isn't his only concern, which means Tuesday won't mark the final turn in Wall Street's trade roller coaster.
The business community and its campaign donations represent vital Republican assets. The top priority of corporate executives — the December 2017 tax-cut — stands as the only major legislative accomplishment Trump and the GOP Congress delivered.
But for its votes, the 21st century GOP increasingly depends on working-class whites without big stock portfolios or high tax liabilities. Instead of material benefits, Trump offers those voters the emotional satisfaction of giving voice to their fears and frustrations.
His bombast on an immigrant "invasion," and harsh border policies in the name of stopping it, serve that purpose. So does his bluster on trade.
In 2016, Trump won Rust Belt battlegrounds by promising to fight the scourge of unfair competition from China and other countries. "This American carnage stops right here," he declared in his 2017 inaugural.
It has not stopped. But tariffs, which Trump can impose without the consent of Congress, let him portray himself as punching back toward that goal.
Tariff punches have hurt China by dampening demand for its exports. They have also hurt Trump's own supporters, especially in agricultural states whose farm exports China has stopped buying.
Those losses have been so acute that Trump has offset them with direct government payouts to farmers. He has pretended other losses — from dampened business investment and increased consumer prices — don't exist at all.
In backing down from the next round on Tuesday, however, Trump surrendered the pretense that only China bears the costs. He did it, Trump acknowledged, to protect American Christmas shoppers.
Welcome as it was to business leaders, that retreat underscored the political weak link of Trump's approach. It's hard to campaign simultaneously as a business-friendly dealmaker and a bare-knuckled battler for the working class.
"Trump caved," Fox News personality Laura Ingraham tweeted about the tariff delay.
Criticism like Ingraham's signals to conservative Fox viewers that the president isn't as tough as advertised. Attempting to serve both audiences has driven regular oscillations in the president's public stance.
When he wants to rouse his blue-collar base, Trump lashes out. When "America First" truculence rattles business too noticeably, Trump pulls back to calm investors.
"With his trade war, Trump has found a way to quickly/suddenly move markets," Jared Bernstein, a top economist for Vice President Joe Biden during the Obama administration, tweeted on Tuesday as stock prices climbed. "I strongly suspect he will use this tool to his electoral advantage when needed."
Yet that becomes harder to pull off as growth slows and recession risks rise. The longer the trade war drags on, the greater the risk of economic damage no presidential tweet can make markets shrug off.
Trump eroded his own leverage against China at the start of his administration by slapping tariffs on U.S. allies and leaving the Trans-Pacific Partnership. Initiated by President George W. Bush and negotiated to completion by President Barack Obama, TPP assembled a coalition encompassing 40% of the world economy to counter China's power.
Wall Street has long assumed that Trump, hitting the limits of his negotiating clout, would settle for a limited, face-saving deal far short of forcing structural changes in China's economy. He struck such a modest deal with Canada and Mexico to update the North American Free Trade Agreement.
But the China conflict's growing rancor has cast doubt on Beijing's willingness to embrace even that.
"Can China handle it by bending?" Carla Hills, a trade expert and Cabinet member for two Republican presidents, wondered in an interview.
"I don't think they can bend," Hills concluded. "It's tragic the way we've handled this whole thing from the beginning."