How Trump’s tariff turned into the chaos of the stock market

Before Wednesday, President Donald Trump’s tariff was expected to be a problem for markets and economics, but it is manageable.

Many of this idea.

What happened instead is something worse than the worst scenario, which has previously been going to the United States its real “mutual” duties on its commercial partners who would match the customs duties charged with American exports.

In an ideal world, it would have led to a round of negotiations that led to deals with which all parties could live as part of Trump’s effort to change the path of global trade, reformulate American jobs and convert the United States from relying on cheap foreign imports and luxurious government spending to the economy that focuses on production.

Fears about this scenario focused on a spark of inflation and perhaps a slight slowdown in growth.

What actually appeared, though, was economic chaos, market and geopolitical.

I started with Trump press conference on Wednesday After the market is closed, when the president read almost joyfully, his intentions “raise foreign markets and destroy foreign trade barriers.”

The plan: a 10 % slap of customs tariffs on each American commercial partner starting from Saturday, with individual prices for 60 other countries that will start within a week. Almost overnight, the rate of effective American tariffs on spring was set from 2.5 % to 20 %.

For perspective, this has the ability to be the highest level since 1910-higher than destructive destructive definitions in 1930 that many economists see contributing to the great depression, which puts an exclamation mark on the anti-router in Trump, the maximum protectionist that exceeded the worst fears Wall Street.

Fast reaction

If Trump is playing chicken with the rest of the world, it is one round.

China Revenge with a 34 % tariff On all goods, European Union leaders are also considering counter -measures, and the hostile relationship with Canada and Mexico will soften during The United States and Mexico-Canada Convention Talks in the coming months.

Markets have declined in developments, and to send stocks to An evil sale for two days This put this nasdaq compound, the home of the strong silicon valley names that Trump was flirting with in the first days of his second term, in the bear market.

Meanwhile, the economists were Commenting on primitive mathematics That went to the definitions account. Basically, management, in a plan Washington Post mentioned It was cooked up to three hours before the announcement, simply the commercial deficit section with individual countries through the total value of the American export to derive the “mutual” definitions that do not seem to be up to the level of bills.

According to the Center for Strategic and International Studies, the formula “Commercial partners with high efficiency are punished The United States imports a lot and buys a little of it, and not necessarily those who have the most restricted commercial systems. “

“In short, the formula provides approximate justice at best, a sharp force in the worst case,” the center said in an analysis.

Market

Investors responded by selling everything except for bonds. After all, how can anyone know what is the right price to pay for future profits when it is now impossible to discover future profits?

Under the best Trump scenario, other countries will come to the table and decrease customs tariffs, open markets for American goods and allow the United States to reach their markets. However, it will require a large re -preparation for the economy that was in 2024 debtor with 68 % of activity to spend on consumers and had a trade deficit of $ 903 billion.

Certainly, there were some early negotiations.

Trump On Friday, the social truth boasted He had a “very fruitful invitation” with the leader of the Vietnamese Communist Party to Lam, who allegedly agreed to reduce the definitions to zero if it was possible to conclude a deal with the United States in addition, Trump’s exposure More attention to a deal with China on TijokLinchpin is possible to reduce the rising tensions between the two sides.

“Only the weak will fail!” On Friday afternoon, Trump announced the social truth.

While the stock market certainly did not fail during the week, it surrendered about $ 6 trillion in value, such as Dow Jon’s industrial average Bleeding shows more than 3900 points in a two -day period, something that has not been done before.

Investors looking for the federal reserve for riding to the rescue were left on Friday when President Jerome Powell indicated The most stringent definitions expected to grow, and most importantly, enhance inflation. Powell announced that the central bank will remain in the reservation pattern on interest rates, which led to hopes at the present time “Federal Reserve” to place a ground under the market massacre.

“I think this is the biggest mistake in politics in 95 years,” Professor of the Warton Jeremy School Siegel He said Friday On CNBC. “This is an injured injury. It is an unhelpful mistake-it shouldn’t have happened.”

However, the numbers of the plowed in stock traders do not see a full -time market, indicating that corrections such as current corrections turn only to a third of the time.

But this depends on the president who was a rebel in his current position, as he pledges on Friday that “his policies will never change.”

Such a firm purpose may play Trump’s supporters, but this is the most intimidated market at the present time.

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