The craziest economic 10 days I have ever experienced

Shah Alam, 13 April 2025

- with help from the New Yorker, the Guardian, Wikipedia and Reuters -

President Donald Trump has been sending shock waves through the global economy by waging trade wars with America's traditional allies and enemies alike.

The president is using tariffs – border taxes levied on imports – to counter what he sees as “unfair” trading practices by US trading partners (but why did the US allow itself to be gouged ?) . Trump's stated aims are to extract better trade deals, lower prices, boost American industry, raise revenue with the objective of distributing wealth directly to citizens and abolishing income taxes, reduce inflation, and diminish China's growing economic strength. (my own assessment is slightly different, though. I believe, that given the president's evident narcissism, all this reinforces the perception of his immense power)

Trump's surprise tariff announcement on 02 April caused the stock markets worldwide to plunge. Stock markets in the US nosedived 14.5 per cent.

In the days following the president’s announcement, we learned that the U.S.’s new tariff rate was projected to reach approximately 25%, which blew past worst-case scenarios and even surpassed the economically catastrophic Smoot-Hawley tariff levels of the 1930s. But by April 9th, Trump paused virtually all “reciprocal tariffs” for 90 days, effectively taking the worst-case scenario off the table.

There remains the China story, however. Beijing initially responded with retaliatory tariffs of 34% on the U.S. but in the days since, tariff rates have ratcheted higher. China has raised levies on U.S. imports to 84%, and President Trump has raised the total tariff rate imposed on China to 145%.

What is left is a 10% universal tariff on all imports into the U.S. and an economic stand-off between the two world’s largest economies. Which is to say, investors should not necessarily expect a durable rally from here. Volatility works both ways, and we are almost certainly not out of the woods yet.

(Reuters, 11 April 2025) - The United States has excluded certain electronics like smartphones and computers from President Donald Trump's reciprocal tariffs, according to a list of items published by the U.S. Customs and Border Protection late Friday. The U.S. CBP listed some 20 products, also including semiconductor-based transducers, solid-state storage devices and flat panel displays. Reporting by Ismail Shakil in Ottawa; Editing by Don Durfee. 

(Reuters, 11 April 2025) Apple moved iPhones from India to America on 6 chartered cargo flights for this. About 1.5 million iPhones, weighing 600 tons, were shipped. Apple also sped up customs clearance at Chennai airport, essentially cutting processing time from 30 hours to six.)

Predictably, economists warn that tariffs risk crashing economic growth and stoking inflation. Trump’s erratic approach – repeatedly announcing, pausing, and changing his policies – is also denting business confidence and rattling financial markets.

Following the surprise easing of US tariffs worldwide (except China), stock markets rebounded, raising suspicions of market manipulation and insider trading.

What a diference a day can make! By Day 3 of Trump's first dramatic tariff announcement, our brokerage account had lost 40 per cent of its value. Then, following Trump's retractions, 10 days later, the portfolio has all but regained its original value!

Here's a full account of the 'tariff war' as summarized by the Guardian:

For a detailed report, see https://en.wikipedia.org/wiki/Tariffs_in_the_second_Trump_administration#:~:text=Since%20the%201980s%2C%20Trump%20has,have%20been%20disadvantageous%20to%20Americans.

Update 16 April 2025

The US has announced a further hike in tariffs on Chinese goods, which now stands at 245 per cent.