The Wall Street Journal used this phrase in a recent editorial, Cut the Trump Uncertainty Tax.

I supported much of the tax cuts, but their effect cannot be considered in isolation.  Taxes are part of a collection of friction costs; if taxes are cut but other friction costs such as regulations are increased the positive effect of the tax cuts will be muted.  Trump has cut taxes and reduced numerous regulations, but his trade war and his rhetoric are an increase in friction costs that threatens the benefit of the tax cuts.

There is already an uncertainty in our tax and regulatory policy due to the partisan volatility.  There is no bipartisan commitment to any long-term economic policy except endless deficits and debt, and that is also a friction cost.  We know this is a liability and we know that neither party has the political capital to curtail spending and entitlements.

Trump maybe correct in recognizing China’s destructive trade policies, but he is wrong to think that alone justifies a trade war.  He is wrong to think that Twitter is an acceptable negotiation platform, and he is wrong to think that he is the only national leader with stubborn pride.  Xi does not face an election in 2020 and has the political advantage of waiting him out, even if they are in a weaker economic position.

Trump is wrong to believe that American consumers and our economy is not affected by these tariffs.  He is wrong to think his unpredictable Twitter announcements do not setback planning for American companies including hiring and capital investments.

Trumps only tools are tax cuts and tariffs; he his playing golf with only one club and it is a driver. No matter how far he hits it he will lose the match.

He blames the Fed for damage from his own policies.  It is more important that the Fed remain independent than it is for it to get every move correct.

The risk is enormous.  Half of Trump’s supporters support his fearless and aggressive posture, but half have great reservations and only support him compared to the lunatic fringe that seems to now dominate the Democratic party.  The was expressed by Erick Erickson at the Resurgent in Yes the President’s Behavior is Abnormal. But the Democrats’ Policies are Bat Crap Crazy.:

 In 2016, Hillary Clinton did win the popular vote just like the polling suggested. If the election were called tomorrow, Joe Biden would beat the President by double digits and that is enough to offset the California-New York population at the polls. The President would lose states he needs and his behavior puts Republicans in jeopardy in places like Texas and Georgia.

As the election nears, he should consider how fragile his position is; it is more important to win the next election than to win the trade war.