- The financial experts, economists, and top global leadership must wonder what the President of the United States of America, Donald Trump, gained by going hyperbolic about tariffs and imposing the same on the world with such brazen impunity. How stock markets responded to the universal import tariffs imposed by the maverick and extremely unpredictable Trump shook up the entire world would be an understatement. The repercussions were felt across the globe, leading to wiping out humongous amounts of money from the investors. After the mayhem, Trump announced a pause of 90 days from the tariffs taking effect on other countries, except China. The moot point to ponder here is what the USA achieved by Trump’s tariff mayhem.
PC: Financial Times
- To sum up, the USA got a financial scare, and economic gains, if any, will be negligible. Of course, anyone expecting Trump to flow quietly for the next 90 days is plain tired. Note that in 80-plus days of his presidency, Trump’s already imposed, raised, discounted, and paused tariffs more times than you care to remember. Now that everyone barring China is tariffed at the 10% baseline, and markets have expressed hysterical relief – but US futures are showing signs of a sugar crash – we may ask, what was the point? Yes, Trump’s always been Tariff Man. Last year’s US poll was all about the economy, and tariffs were Trump’s top prescription. As such, the surprise is not that he imposed them but that he backed off so fast.
PC: The New York Times
- It begins to make sense, though, if you consider tariffs as an interesting experiment. Mind you, Trump sold tariffs to voters as a fix for American manufacturing’s decline. Surprisingly, even Wall Street types and the public backed him because he was seen as the most pro-stock market president the USA had in its history. Markets took Trump’s first tariff announcement on Jan 31 – 25% on Canadian and Mexican imports, 10% on China, rather well. S&P 500 lost just 0.5%. But the incessant hammering, uncertainty, and indiscriminate tariffing of all countries eventually proved too much for markets, voters, and billionaires. Little wonder, Trump’s approval ratings have been at their lowest since the last six months.
PC: Anadolu Ajansı
For ordinary Americans, that kind of stock market mayhem means reduced wealth and pensions. Fears of recession, coupled with tariff-induced inflation, weighed them down. Meanwhile, Trump’s billionaire friends were spooked by the prospect of a self-induced nuclear winter. As for Trump, treasury bonds bent him. That investors were dumping US bonds meant more than ordinary stability. The experiment had to end. When, or rather if, the tariff dust settles, the best case scenario is that the US may have a smaller trade deficit, but with its strong currency, it can’t expect low-value manufacturing – textiles, garments, toys, laptop assembly- to return like it’s the 1950s. Trump has stirred a hornet’s nest with tariffs, and everyone will pay a price for it. Period.
