{"id":13403,"date":"2025-04-12T03:37:20","date_gmt":"2025-04-12T03:37:20","guid":{"rendered":"https:\/\/finderica.com\/?p=13403"},"modified":"2025-04-12T03:37:20","modified_gmt":"2025-04-12T03:37:20","slug":"what-trumps-tariff-about-face-means-to-the-u-s-economy","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=13403","title":{"rendered":"What Trump\u2019s Tariff About-Face Means To The U.S. Economy"},"content":{"rendered":"\n
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CORRECTS CITY TO GLENDALE, INSTEAD OF BURBANK People shop at Costco Wholesale store in Glendale, … More<\/span> Calif., on Thursday, April 10, 2025. (AP Photo\/Damian Dovarganes)<\/span><\/p>\n

<\/fbs-accordion>Copyright 2025 The Associated Press. All rights reserved<\/small><\/figcaption><\/figure>\n

It\u2019s been a couple of days since the Trump administration performed an about-face on its reciprocal tariff plans. The announcement sent the stock market into a giggling dance of delight. Major indices that had fallen into a major pothole climbed back up. The Dow Jones Industrial Average gained nearly 2,963 points; the S&P 500, almost 492; the Nasdaq, more than 1,800.<\/p>\n

Some have argued that this was masterful manipulation and negotiation by Trump two days after he had said that the reciprocal tariffs were absolutely going into place and wouldn\u2019t be paused<\/a>, as PolitiFact documented.<\/p>\n

Subsequent Tariff Impacts<\/h2>\n

The good times were gone the next day, with the Dow down 2.50%; the S&P losing 3.46%; and the Nasdaq, off by 4.31%. Bond prices? The yield of the hugely influential 10-year Treasury note went from 4.01% on April 4 to 4.26% on April 8 and, at the end of yesterday, April 10, it was at 4.40. That means the price on the 10-year has been falling, even after what was considered a successful sale by the Treasury of $39 billion of the notes.<\/p>\n

What is occurring is highly contradictory and confusing. The CBOE Volatility Index, or VIX \u2014 a measure of near-term volatility expectations deduced by stock index option prices \u2014 hasn\u2019t flirted with its largest recorded value. The reaction to the pandemic shutdown, shown on the left-hand side of the graph below was steeper and that during the Great Recession was worse still.<\/p>\n

<\/p>\n

VIX volatility index over time shows heightened market uncertainty now.<\/p>\n

<\/fbs-accordion>Federal Reserve Bank of St. Louis<\/small><\/figcaption><\/figure>\n

Trump had \u201cclearly been alarmed by the financial market chaos that has followed since first announcing tariff \u2018liberation day\u2019, unleashing a slate of import tariffs on trade with the US,\u201d said Richard Portes, a professor of economics at the London Business School, in emailed remarks. \u201cOverall, he has realized that the immediate implementation of tariffs would produce chaos and reactions that wouldn\u2019t be easy to reverse.\u201d<\/p>\n

What Would Have Happened<\/h2>\n

The consequences of continuing on the path were dire in the views of some. \u201cIf the tariffs had not been put on hold, we\u2019d see an immediate increase in inflation: 3% in the short term, up to 6% by the end of the year,\u201d wrote Tucker Balch, professor at the Goizueta Business School at Emory University.<\/p>\n

\u201cHad the tariffs stayed in place, there could have been short term disruptions on supply chains,\u201d Ali Meli, managing partner and chief investment officer of Monachil Capital Partners, told me. \u201cThere could, for example, have been spikes in prices of certain consumer goods.” It was also \u201cbecoming increasingly clear that Wall St. and hedge funds may require a bailout, which this administration finds undesirable,\u201d Meli added.<\/p>\n

Now, for what happens after: \u201cThe relaxation of most of these tariffs will decrease those numbers, but we will still see inflation increase,\u201d Balch said. This is at a time when most families in the U.S. have seen too great a decline in their economic power and resources over decades. It\u2019s added challenges when they have become weakened.<\/p>\n

The Aftermath<\/h2>\n

There\u2019s the erosion of goodwill internationally, which can have profound economic and security implications. \u201cIf the United States, at the wave of a pen, can undo decades of negotiations and agreements, should countries find another market for their goods – or another source for their resources?\u201d said Javier Palomarez, CEO of the United States Hispanic Business Council, in an emailed note. \u201cThe United States represents one of the largest, in terms of dollars, consumer markets in the world. However, the international community can only weather a certain amount of taxation, manipulation and uncertainty.\u201d<\/p>\n

And there\u2019s the erosion of the dollar\u2019s position in the world, as Freya Beamish at GlobalData.TSLombard<\/a> writes. She said that for close to a year, the firm has seen a \u201cserious tail risk\u201d in which the global dollar standard might not hold. Through the imposition of the reciprocal tariffs, the dollar behaved as it has since 1973 with the establishment of the new global currency regime. On the tariff reversal, that changed and moved the world closer to a \u201cmulti-polar international monetary system\u201d under which the U.S. won\u2019t retain the favored status that has benefited it for many decades.<\/p>\n<\/div>\n

Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

CORRECTS CITY TO GLENDALE, INSTEAD OF BURBANK People shop at Costco Wholesale store in Glendale, … More Calif., on Thursday, April 10, 2025. (AP Photo\/Damian Dovarganes) Copyright 2025 The Associated Press. All rights reserved It\u2019s been a couple of days since the Trump administration performed an about-face on its reciprocal tariff plans. The announcement sent<\/p>\n","protected":false},"author":1,"featured_media":13404,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[196],"tags":[5494,285,435,1604,962,272],"class_list":{"0":"post-13403","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance-news","8":"tag-aboutface","9":"tag-economy","10":"tag-means","11":"tag-tariff","12":"tag-trumps","13":"tag-u-s"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/13403","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13403"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/13403\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/13404"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13403"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13403"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13403"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}