Dow Tumbles as Markets Brace for Global Trade War
Like it or not, these days trade is global. Even American made cars have parts that come from Mexico and Canada, for example, to reduce the cost of the product. Because of Trump’s tariffs, we already know that those cars will jump in price by thousands of dollars– as much as $10,000 depending on the vehicle. But given the broad nature of the tariffs Trump is imposing across the board –10% on every country with huge variations based on Trump’s whims–EVERYTHING coming from other countries is about to become much more expensive including your morning coffee.
What are tariffs?
Tariffs are a tax on imported goods, typically paid by the person or company that imported them (formally known as the “importer of record”). Many importers pass these costs down to consumers by charging higher prices. Tariffs are collected by the government that imposes them.
Trump claims tariffs promote American enterprise and will herald in a beautiful future for Americans in which we are liberated from global trade arrangements where (he says) we have been taken advantage of by other countries. No more Mr. Nice Guy. When he was campaigning, Trump told us he wanted tariffs and his base cheered for that. Trump may think he will be able to get his face on Mount Rushmore by going big on tariffs. He probably thinks other countries will be begging him for concessions and relief from these high tariffs and he will make great deals right and left.
This is an approach that sounds plausible to many of his voters who were angry at the global trade agreements that robbed them of their livelihoods by shipping jobs and industries overseas. Trump says his approach will result in business enterprises relocating to the US so that everything needed to make a car, for example, will be developed here instead of globally.
But this is fantasy thinking – something Trump and the people surrounding him in his second term are good at. Robust business revitalization would take many many years to develop–possibly decades. It would not happen overnight. You can’t wave a magic wand and relocate and rebuild business ventures. And if you create jobs that are the kind of menial jobs American businesses have used cheap labor for in places like Taiwan or China, most Americans won’t want those jobs and they won’t make enough money doing them.
Trump is also gambling that other countries will not reject America and isolate us as a result of his harsh and unprovoked bullying. Trump’s massive damage to our country and the world is more likely to suppress business and technological development here as innovators choose other countries to study and live in. Our country will be seen as a bad place for investment. If nothing else, this president is too chaotic and unpredictable, and he is upending the rule of law in America, which are all important factors in choosing where to locate your business.
Protectionism like this has been tried before in India and even in our country before with the infamous Smoot Hawley tariffs that in the exacerbated the Great Depression. They inevitably lead to economic damage for the country trying to shield itself from global interaction. In the meantime, Americans are going to suffer and our country will be seen as a bully, not a friend. Feared, yes, but not a country you trust as your ally.
Countries that feel unfairly attacked by Trump are also not going to take Trump’s tariffs lying down. They will fight back with tariffs of their own. They already are. China just slapped a reciprocal tariff on US goods of 34%. That’s just the start of reciprocal tariffs that every country will slap us to retaliate against the Trump tariffs he put on every country in the world except…wait for it…Russia.
“I don’t believe most investors and, frankly, most Americans fully appreciate how these tariffs are going to translate to higher inflation, lower growth and lower corporate profits,” Ron Temple, a market strategist at Lazard, told Politico.
The American consumer will pay the price. We will have to pay higher prices on all goods that enter from foreign markets. A recession is far more likely now- the probability has jumped to 60% (JP Morgan) from close to zero. But Trump doesn’t seem to care about the pain he will be imposing on the American people. He will try to convince people that the pain is necessary to get to a better outcome- like a patient after surgery.
I think Senator Chris Murphy put his finger on one of the big motivators for Trump’s tariffs.
Senator Chris Murphy (D-CT) suggests “they are a way to make private industry dependent on the president the same way he has tried to make law firms and universities dependent on him. Industries and companies “will need to pledge loyalty to Trump in order to get sanctions relief.”
So what happens from here?
CANARIES IN THE COAL MINE
Canaries were used in coal mines to detect the presence of carbon monoxide. The bird’s rapid breathing rate, small size, and high metabolism, compared to the miners, led birds in dangerous mines to succumb before the miners, giving the miners time to take action to save themselves from asphyxiation.
Special elections can be political “canaries in the coal mine”. They can help us understand the political winds of change that are developing and strengthening and that can predict our political future. On April Fools Day, 2025, the special elections across our country indicate trouble coming for Trump, Musk and the MAGA movement.
Let’s start with the reason those winds of change are gaining strength even before Trump’s tariffs are factored in.
MASSIVE DAMAGE TO THINGS AMERICANS CARE ABOUT A LOT
Trump won in 2024, but he did not have what he claims to have, namely, a big fat mandate. Despite that, he has been acting as if he does have a great big mandate to do whatever he wants and act like he’s the king of everything. After winning, he and the DOGE bros, Elon Musk, and the disgustingly wimpy Republican Party that controls both the House and Senate, have gone all in, whole hog! on the destruction of our government. They are trashing the joint in the name of “making it all so much better”.
Yeah. That’s Orwellian double speak.
The real goal I think is to stock up the government coffers so that Trump can give the super rich the tax break he promised them (that’s why they voted for him), justify no taxes on tips (his throwaway gift to the little people who thought he was going to be their populist hero), and enrich himself. Promising those goodies along with promises to improve the economy, fix the immigration mess, and fight crime got Trump elected by people who should have known better than to vote for a would-be autocrat/dictator who told us he would be a dictator “on day one”.
Many Americans have been and still are deluding themselves. They thought: “Hah! He’s just kidding. He would never do that.” But Trump is doubling down on doing “THAT”. Namely, attacking our country from within. He is doing the unthinkable- wrecking our country–crippling the FAA, FEMA, NOAA, our education system, our health care system, our rule of law, our research institutions including NIH as well as our universities, our social safety net, free speech (certain law firms Trump targets cannot oppose Trump’s will which includes representing people he doesn’t like or having people he doesn’t like on staff without being attacked by him which is NOT free speech) and now he is attacking our economic strength as a country with his stupid tariffs.
The damage is mounting. It is already huge. Not just clean up on aisle 3. The damage he has already done will cripple our country’s future and set us back for decades and we are only in the first few months of his reign of terror. China will gain power. It already is. Our trading partners and former allies are reaching out to China to make deals. We will become a country where our people are poorer, and sicker because of what Trump has already done to us and with what is surely coming because he chose incompetent cabinet members who don’t comply with security protocol and don’t have oversight or accountability.
Another MAGA goal is to “own the libs” which makes MAGA world feel victorious and strong and hang in there with Trump no matter how dumb or vicious or damaging he is. Causing liberals to cry is apparently MAGA’s happy place. But owning the libs is a hollow victory. It won’t get especially older MAGAs back what they need to have sustainable lives: the social safety net- Medicare, Medicaid, Social Security, Veterans benefits and much more. They don’t say they are trashing the social safety net. They just cripple it and say it’s falling apart on its own. There is no one you can call anymore. There is a long long wait. There are no ways they can figure out how to fix the problems.
Aww. Too bad.
On top of all of that we are going to be paying the price for Trump’s tariff war.
BACKLASH AND THE COUNTER MOVEMENT TO TRUMP
So now we get to the canaries in the coalmine- even before Trump’s ill fated tariffs.
In Wisconsin, Judge Crawford beat Judge Schimel, 55% to 45%. … In Florida’s 1st congressional district, Republican Jimmy Patronis beat Dem opponent Gay Valimont, 57% to 42%. (Trump won the district by 37 points in 2024.) … And in Florida’s 6th congressional district, Republican Randy Fine beat Dem opponent Josh Weil, 57% to 43%. (Trump won that one by 30 points.)
In another special election in Pennsylvania last week the Democrats defended their majority in the state house and flipped a deep red PA Senate seat in a district Trump won by 15 points red to blue.
Why are these numbers canaries in the coalmine?
They indicate a movement away from Trump/Musk/ MAGA and towards Democrats in sufficiently large numbers that, if replicated in purple (swing) states across the country in the midterms, would return control of the House to the Dems and possibly the Senate as well. Americans who want to put a check on Trump are highly highly motivated to vote. They showed up in astronomical numbers in Wisconsin for a special election, and the low propensity male voters Trump got to vote for him in 2024, stayed home on their couches playing video games. If that is replicated in the midterms, Trump will finally get checked and balanced by a congress that will not roll over and play dead anymore.
WHAT DID WE LEARN FROM WISCONSIN AND FLORIDA?
First, we saw a 10 point win for a liberal justice in Wisconsin with very high turnout in a special election. Wisconsin is a purple state that had been seriously gerrymandered by the Republicans before Governor Evers reworked the maps to be much more fair to both political parties. This win will ensure reproductive rights for Wisconsin women and continued fair maps which will allow Wisconsin to have more representative outcomes in their elections. Beyond that, Wisconsin has been THE pivotal state in national elections. This win indicates we are likely to have a more representative result in our next national elections assuming these trends continues.
Next, in Florida, the vote shift there was a 16 point swing in one district and a 22 point swing towards Dems and away from MAGA Republicans. That averages to a 19 point swing towards the Dems that happened in only 4 to 5 months and prior to Trump’s tariff war.
In Wisconsin, Elon Musk could be blamed for trying to buy the election and for making himself the face of the Republican effort there. Since he has high disapprovals, you might conclude that Musk was the reason for the Republican loss in Wisconsin. But Musk was not a factor in Florida. The shift there was more clearly the result of the damage being done by Trump and Musk especially to Veterans and the social safety net that older Americans need to stay alive. 40% of Americans live off of their social security checks. Florida was a clearer and more convincing rejection of Trump’s policies.
THE REAL LIBERATION DAY
The stock market is currently falling like a rock thanks to Trump’s tariffs announced on so-called Liberation Day.
The Dow was down 1,679 (3.98%) today. NASDAQ was down 1,050 (5.97%), Tesla was down 15.48 (5.47%).
… Fox took the stock market ticker off their screen for the first time in the history of the network.
… Senator Angus King (I-ME) during a committee hearing: “I have to point out, Mr. Chairman, in the hour that we’ve been sitting here, investors in the US stock market have lost two and a half trillion dollars.” (As of this writing it is up to 3 trillion.)
The only things that really got liberated was you from your wallet, your economic future, your 401K, and your peace of mind.
As for real Liberation Day… that Glorious Day will come when Trump and Musk’s broligarchs are no longer in power and we can start rebuilding our country, our democracy and our alliances with a sane administration. That day cannot come soon enough for a growing number of Americans.
HANDS OFF PROTEST RALLIES IN ALL 50 STATES SATURDAY, APRIL 5TH
You can help make Real Liberation Day happen by getting out to a rally this weekend, Saturday, April 5th. Find a rally and go there. Become part of the solution.
fastcompany.com/91309656/hands-off-april-5-protest-near-me-saturday-trump-musk-50-states-what-to-know