I will use just one of many incoming messages to summarize the nearly universal view about the Trump tariff announcement.
Doc A. wrote:
I haven’t made a prediction in 5 years, but I just read 3 emails from “news” agencies that made mumbled speculations about today. It seems clear to me. Here’s what I see coming.
According to well-known economist Joseph Brusuelas, “US imports of goods have been the driving force of the current global business cycle, with the US demand for foreign goods accounting for 12% to 14% of total world imports… And it’s nothing new. The US has been the consumer of last resort for at least the past two generations.”
This week Donald Trump is going to implement tariffs on goods and services from many countries around the globe. Those countries, in turn, will implement “reciprocal” (retaliatory) tariffs on US good and services. These actions will derail anything that’s left of the 1948–1994 General Agreement on Tariffs and Trade plus all the work of the 1994 World Trade Organization.
Ripple-down effects:
US businesses that export to foreign markets, and foreign businesses that export to the US, will see a sudden drop in orders and revenues.
There will also be a drop in shipping.
And for the businesses who provide raw materials and finished products to the exporters. Not to mention suppliers of agricultural products and commodities.
All four levels in the world trade hierarchy will be affected. This will lead to layoffs, increases in unemployment, and a decline in demand for consumer goods. In short, a global recession. The very rich will be inconvenienced. The well-to-do will become the middle class. The middle class will become the lower class. And the lower class will suddenly become poor, which means the people who were already poor will have more competition for the few manual labor jobs that are still available.
Here’s a video clip from Peter Tchir of Academy Securities:
“Stocks Have ‘At Least’ 10%-20% to Fall on Tariffs: Academy’s Tchir”
https://www.bloomberg.com/news/videos/2025-04-02/stocks-have-at-least-10-20-to-fall-on-tariffs-tchir-video
IMO, we are on a course for an economic slowdown or recession in the US and more inflation — the classic “stagflation” combination that is difficult for nearly everybody. And it wasn’t caused by the Fed, which now finds itself between a rock and a hard place when it comes to any forward-looking policy options.
And there it is.
