While President Donald Trump enjoyed a weekend of golf in Florida, his sweeping new tariffs quietly took effect—targeting countries from China to the Falkland Islands. Businesses wasted no time reacting.
Jaguar Land Rover paused U.S. shipments. Howmet Aerospace, a key supplier for Boeing and Airbus, warned of possible halts in delivery due to increased costs. On Wall Street, chaos erupted. The S&P 500 plummeted by nearly 10% over two days, and the VIX volatility index hit pandemic-era levels.
The reason? Simple economics.
Tariffs are taxes—they reduce overall buying power and increase prices. Federal Reserve Chairman Jerome Powell bluntly stated that these tariffs are “significantly larger than expected,” leading to inflation and economic slowdown. JPMorgan Chase echoed the warning, predicting a potential recession by year-end despite strong job numbers.
From Optimism to Regret
In late 2024, markets rallied nearly 20% on hopes that a Trump presidency would boost an already strong economy. Business leaders, including JPMorgan CEO Jamie Dimon, were euphoric—literally “dancing in the streets.” But optimism masked the reality: Trump’s erratic business history and anti-globalization rhetoric were red flags.
Investors ignored the warnings—and now they’re paying the price.
Read Also: Billionaire Trump backer warns of ‘economic nuclear winter’ over tariffs
Protectionism Gone Rogue
It’s one thing to challenge global trade imbalances strategically—both liberals and conservatives have criticized the excesses of hyper-globalization. But Trump’s new wave of tariffs isn’t strategic. It’s chaotic.
Here’s the twist:
Trump isn’t just taxing nations with unfair trade practices. He’s penalizing any country with a trade surplus, regardless of how or why it exists. His administration uses a baffling formula—surplus divided by imports, multiplied by 0.5—with Greek symbols thrown in for show, and zero attention to how much those countries actually tax U.S. goods.
Example:
- E.U. average tariffs: 5%
- Trump’s new tariff on E.U.: 20%
This isn’t reciprocity. It’s retaliation without logic.
Hurting Allies—and the Poor
Shockingly, the tariffs hit not only major economies but also struggling nations like Lesotho and Malawi. These countries barely import American goods because of their poverty. Yet Trump’s policy penalizes them just for exporting cheap textiles.
In short, Trump is taxing poverty.
Will the Plan Even Work?
Trump claims his goal is to bring jobs back to American factories. But businesses need stability to invest in long-term operations. Tariff whiplash does the opposite.
Moreover, many imports are essential parts for American products. Tariffs on these increase production costs—hurting domestic manufacturers.
A Federal Reserve study of Trump’s 2018 China tariffs showed no boost in jobs—in fact, a 1.4% decline in manufacturing employment.
Economic Chaos on All Fronts
This new tariff regime doesn’t exist in a vacuum. It’s backed by broader policy moves that undermine American innovation, such as:
- Cutting funding to the National Science Foundation and NIH
- Cancelling clean-energy and EV grants
- Reversing tailpipe pollution rules
- Slashing support for small manufacturers
If this is mercantilism, it’s mercantilism gone mad.
A Global Crisis in the Making
Trump’s approach mirrors Brexit in its economic self-sabotage—but on a global scale. Unlike Britain, the U.S. plays a central role in the world economy. Since WWII, it led global trade efforts for mutual benefit. Now, under Trump, it’s abandoning that role—and dragging others down with it.
Final Thoughts
Markets hate uncertainty. With Trump’s tariffs, the only certainty is pain—for businesses, consumers, and global partners. If this continues, we won’t just see a downturn. We could be staring into an economic nuclear winter.
