Trump tariff announcement shakes up global economy
On Wednesday, Donald Trump shook the tree and quite a bit fell out after his massive tariff announcement.
Trump revealed reciprocal tariffs on friends and enemies alike, and it shook the world.
Trump Announces Return of ‘American Dream’
Trump has been threatening to hit countries which have tariffs against the United States with reciprocal tariffs, but it would appear that most people thought he was bluffing. Well, he was not.
Trump stated, "American steel workers, auto workers, farmers and skilled craftsmen. We have a lot of them here with us today. They really suffered, gravely. They watched in anguish as foreign leaders have stolen our jobs, foreign cheaters have ransacked our factories, and foreign scavengers have torn apart our once-beautiful American dream. We had an American dream that you don't hear so much about. You did four years ago, and you are now. But you don't too often.
"Now it's our turn to prosper, and in so doing, use trillions and trillions of dollars to reduce our taxes and pay down our national debt. And it will all happen very quickly. With today's action, we are finally going to be able to make America great again, greater than ever before. Jobs and factories will come roaring back into our country, and you see it happening already. We will supercharge our domestic industrial base."
This is a negotiating tactic by Trump, hoping to get tariffs reduced, but it is a risky play because there will be immediate pain both here and around the world. That leash everyone has given him just got pulled out, so his plan needs to work sooner rather than later.
Stock Market Crashes
The market has been bracing for this announcement for quite some time, as many investors have been slowly pulling their money out of the market.
After the announcement, that went into overdrive, with investors looking to pull out now to save themselves against future losses until the market starts to rebound and this situation levels off.
As of this report, the market had plunged nearly 1,500 points. NASDAQ dropped by 5%. Stocks losing value outpaced stocks gaining by a 6:1 ratio.
Major companies saw massive dips due to the impact the tariffs will have on them. Nike dropped by 13%, Apple dropped by 9%, Dollar Tree went down 11%, and the Gap tumbled, losing 20%. These are all stocks featured in retirement portfolios, so needless to say, there is mass panic right now.
China and EU React
Both China and the European Union have threatened to retaliate against Trump’s tariffs. China has already been hit with 54% tariffs, and its leadership demanded the United States immediately pull back on these tariffs of China will respond in kind.
Beijing’s commerce ministry stated, “China firmly opposes this. There are no winners in trade wars, and there is no way out for protectionism.” European Union chief Ursula von der Leyen stated that the EU feels “let down by our oldest ally.” Everyone seems to forget that the United States was not imposing tariffs on many of these countries even though we were facing them.
I understand the strategy, but I hope it works sooner rather than later because if this move fails by Trump, we are looking at a global recession, as this will crash the global economy, and it will not take long for it to happen. Prices are about to soar, so get ready for the pain. And that does not even take into account the supply chain nightmare that China can create for the United States.
The most dangerous aspect of this plan is that if we do slip into a global recession, it will take years to climb out of, far longer than Trump will have in office, and it will end any hope the GOP has of retaining the House and Senate in 2026, and you can add the White House to that in 2028. Even more devastating is how this will impact the retirement accounts of people getting ready to retire now, many of whom probably just saw their accounts dip by 10% or more in a single day. Trump just pushed all of our chips into the middle of the table, so I hope he is holding a Royal Flush.
