Liberation Day morphed into an Obliteration Day of everyone’s retirement account in a matter of minutes as Trump’s tariffs were announced to a crowd of hard hats and soft heads in the Rose Garden April 2. Donald Trump has the dream of Americans working on assembly lines and operating sewing machines. Any country selling more goods to the US than buying from the US is screwing the US, according to Trump’s reasoning. And, America has been taken advantage of for decades, according to the President.
As markets plummeted, the tin-eared president posted on Truth Social,
The surgery is complete. The patient survived and is recovering. The prognosis is that the patient will be significantly stronger, bigger, better and more resilient than ever before. Let’s Make America Great Again!
And, we’ve only just begun. “If the tariffs, which are in effect the biggest US tax rise since at least the 1950s, cause the economy to shrink, stocks and yields still have a long way to go down” writes James Mackintosh in the Wall Street Journal.
President (or Doctor) Trump told reporters as he left the White House that the market reaction to the tariffs is “going well.” He then claimed the market will boom. Young investors are believers. “I’m adding — maybe in a couple years my future self will thank me,” said Kian Saidi, a 28-year-old Californian who says he became a full-time day trader in 2021. He is buying ETFs that track indexes including the S&P 500 and small-cap stocks, reports Bloomberg.
Commerce Secretary Howard Lutnick echoes his boss’s aggrievement. “These non-tariff trade barriers, they are the monster that needs to be slayed,” Lutnick said in an interview on Bloomberg Television’s Surveillance Thursday. “Our teams are talking to all the great trading partners today,” he said. “It is time for them to do deep soul searching on how they treat us poorly and how to make it right.”
Lutnick and Trump are attempting to change America’s trade policy the way Elon Musk is trying to cut government bloat. But, as Wolf Richter wrote,
The stock market has gotten addicted to the government’s deficit spending, to the fat profit margins from offshoring production, and to the Fed’s erstwhile free-money policies, including trillions of dollars in money-printing, of which $2.2 trillion have so far been un-printed via QT.
The market doesn’t wait to see how policies work out. David R. Breuhan wrote on mises.org,
The stock market collapse began on Oct. 28, 1929, as news spread that the Smoot Hawley Tariff Bill would become law. The front-page New York Times article read: “Leaders Insist Tariff Will Pass.” Although the tariff bill didn’t become law until June 1930, its effects were felt eight months prior. Markets reacted immediately, as they discount future earnings.
The Smoot-Hawley tariffs ushered in the Great Depression, the Trump tariffs may be history repeating, or at least rhyming.
