Tariffication! A tumultuous time in world financial markets
On April 2, 2025, President Donald Trump announced “Liberation Day,” where he levied a base 10% tariff on the world, including the Heard and McDonald Islands, which are solely inhabited by penguins. Additional “reciprocal” tariffs have been imposed on some countries, including Vietnam (46%), the EU (20%), China (34%), and Japan (24%). However, Trump’s idea of reciprocity is based on faulty data; he bases his “discount” tariffs on the trade deficit, not the tariff rate imposed by other nations.
This sent the stock markets plummeting, wiping out trillions of dollars worth of value, including people’s 401 (k) retirement investment accounts. As everyone who has a working brain, and is not drinking the orange Kool-Aid, expected, China and the EU imposed their own retaliatory tariffs on US goods. Good ol’ thin-skinned Trump upped the tariff percentage, and currently, tariffs on China are up to a ridiculous 145%, after China imposed a 125% tariff on US imports, matching Trump’s tariff on Chinese imports.
Trump still asserts that China will pay for the tariffs, not Americans. I’ve got shocking news; he’s lying to you. Tariffs are paid by the importer of the product, which is passed on to the consumer. An importer might be able to absorb a small tariff, but 145% is not possible. So, do y’all want to be paying $2,000+ for your iPhone? Not that it will happen, as Trump has now carved out smartphones and computers from the tariffs on China, I wonder how much big tech CEOs have greased Trump’s palm to make this happen?
On the subject of backtracking, all tariffs outside the base 10% and China have been paused for 90 days. This, in my opinion is because someone whispered in Trump’s ear that not only the stock market is crashing, but also the US bond market is crashing as countries cash in their US bonds, indicating that the world has low faith in the stability of the US financial markets, and/or its current administration.
The effects of this have not even hit consumers yet, and when it does, his base, outside the hardcore Trump Felators, will believe what he says despite all the evidence indicating otherwise, will be PISSED! One of Trump’s core campaign promises was to reduce the cost of living on DAY 1, we’re 3 months in and still waiting. These tariffs are going to do the exact opposite; those cheap TVs that Americans like so much won’t be so cheap anymore, and those high-end TVs will be only for Trump and his rich buddies. This will affect more than tech; even those “American-made” products likely contain parts sourced from China, so expect the price of these products to rise as well. The fallout from these tariffs will be wide-ranging.
Furthermore, Trump is suspected of insider trading and manipulating the markets. The accusation is that he created tariffs to cause the markets to decline, allowing himself and his wealthy buddies to buy stock cheaply before announcing the tariff pause, which inevitably made the markets rally. None of this matters as the US Supreme Court has ruled that whatever a president does in office is immune.
I don’t claim to be a financial expert, but blanket tariffs, even ones on an island of penguins, are not the way forward. Strategic tariffs, such as the 25% tariff on cars, make sense to incentivize car companies to return to manufacturing their cars in the US. However, blanket tariffs on China without any plan to build factories in the US to replace those in China is not a good strategy. This really isn’t rocket surgery.