Guardrails

Take a bow, Bill Ackman.

A guardrail standing guard today in Boston. Photo: The Editors.

One of the things you hear among people who are worried about President Trump is that there are “no guardrails.” The Republican Party controls the House and Senate and voted to confirm Tulsi Gabbard and Robert F. Kennedy Jr. The Supreme Court is dominated by Republican-leaning justices. The cabinet and White House staff are loyal to Trump.

What, then, is the remaining check or restraint on Trump?

Take a bow, Bill Ackman. Take a bow, Dan Loeb. And, three cheers for our financial markets, which are deep and robust and remain able to send clear signals about the consequences of tariff and trade policy moves.

Loeb, an investor, posted to social media an American Enterprise Institute article about how Trump’s tariff’s formula made “no economic sense.” “Thoughtful piece on potential conceptual as well as practical errors that went into the announced tariff policy. It will be a test of the administration’s judgment versus ideology how they resolve this over the weekend or coming days,” Loeb said.

Ackman, another investor, wrote, “by placing massive and disproportionate tariffs on our friends and our enemies alike and thereby launching a global economic war against the whole world at once, we are in the process of destroying confidence in our country as a trading partner, as a place to do business, and as a market to invest capital.” He went on, “The president is losing the confidence of business leaders around the globe. The consequences for our country and the millions of our citizens who have supported the president — in particular low-income consumers who are already under a huge amount of economic stress — are going to be severely negative. This is not what we voted for.”

Even Elon Musk, whose Tesla arguably is aided by the tariffs, denounced Trump trade adviser Peter Navarro (who has two graduate degrees from Harvard, including a Ph.D. in economics) as “truly a moron” and “dumber than a sack of bricks.”

Senator Bernie Sanders, the socialist from Vermont, says, “Billionaires should not exist.” He says “the very rich are the problem.”

Maybe Trump would have backed down from the tariff threats on his own all along without any kibitzing from Ackman or Loeb. Maybe he would have backed down on his own even if the stock market had soared on his tariff announcements and threats rather than plunging. Maybe he knows what he is doing, was elaborately bluffing all along, was running the “Art of the Deal” play to lower trade barriers, and the whole idea that he needs guardrails underestimates him.

But just in case that analysis is wrong, it’s reassuring to know that capitalism, in its own way, offers restraints on a politician.

Michael Cembalest of J.P. Morgan wrote in his March 12, 2025, “Eye on the Market”: “Here’s the interesting thing about the stock market: it cannot be indicted, arrested or deported; it cannot be intimidated, threatened or bullied; it has no gender, ethnicity or religion; it cannot be fired, furloughed or defunded; it cannot be primaried before the next midterm elections; and it cannot be seized, nationalized or invaded. It’s the ultimate voting machine, reflecting prospects for earnings growth, stability, liquidity, inflation, taxation and predictable rule of law.”

Anyway, remember this the next time some Alexandria Ocasio-Cortez or Elizabeth Warren type suggests taxing billionaires out of existence or adding a transaction tax to stock sales and purchases to punish short-term trading moves. Those Democratic proposals are attacking the guardrails for which all Americans should be grateful. As robust as are the Constitutional checks and balances, markets and property rights and private wealth offer additional trustworthy signals. That’s not to say that billionaires don’t sometimes err or fail to get their way, or that markets aren’t sometimes irrational or mispriced. But we are better off with them—much better off—than without them.

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