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Fallout From Trump Tariffs – What Happened

ElitePersonalFinance

Last Update: April 9, 2025 • Financial News •

The fallout with the latest titles continues with a complete rout of the US stock market on Monday morning.

After losing 4,000 points on Thursday and Friday last week, the Dow Jones Industrial Average went down 3.3% (or 1,325 points), the NASDAQ 100 went down 3.8%, and the S&P 500 went down an additional 3.5%, firmly placing the country in bear market territory. At the same time, powerhouse investment banks continue to raise their odds for a recession—now at 60% (JPMorgan) and 45% (Goldman Sachs), respectively.

The global tariff situation has also affected other indexes, such as Germany’s DAX and Japan’s Nikkei.

Trump’s Latest Comments Towards China

In response to China’s reciprocal tariffs over the last week, President Trump threatened an additional 50% tariff if it does not meet the demand to lower it by Tuesday, April 8th.

“If China does not withdraw its 34% increase above their already long-term trading abuses by tomorrow, April 8th, 2025, the United States will impose ADDITIONAL Tariffs on China of 50%, effective April 9th,” Trump posted on Truth Social.

“Additionally, all talks with China concerning their requested meetings with us will be terminated! Negotiations with other countries, which have also requested meetings, will begin taking place immediately. Thank you for your attention to this matter!” he continued.

The latest tirade towards China raises concerns about an escalated trade war, with the Chinese Embassy not responding favorably, accusing Washington of “economic bullying.”

Which Countries Have Tried to Negotiate So Far?

According to Treasury Secretary Scott Bessent, more than 50 countries have stopped trying to negotiate tariffs.

“More than 50 countries have approached the administration about lowering their non-tariff trade barriers, lowering their tariffs, stopping currency manipulation,” said Bessent. “We’re going to have to see what the countries offer and whether it’s believable… after 20, 30, 40, 50 years of bad behavior, you can’t just wipe the slate clean.”

One of the Trump administration’s top advisors, Bessent has routinely avoided describing the torrent of tariffs as a negotiation tactic, instead framing them as a necessity based on the national emergency. A second decision-maker, White House National Economic Council Director Kevin Hassett, also stated that the tariffs should have a limited impact on consumers.

“I don’t think that you’re going to see a big effect on the consumer in the US because I do think that the reason why we have a persistent long-run trade deficit is these people have very inelastic supply,” said Hassett in an ABC’s “This Week” interview.

These claims contradict independent research. For example, Yale’s Budget Lab has projected that average US households will spend close to $4,000 extra this year thanks to the tariffs, with a disproportionate effect on clothing and textiles.

The Yale Budget Lab also states that lower-income households should feel the impact more, with disposable income dropping by 2.3% versus 0.9% for families in the top 10% of earners. However, higher earners stand to lose more dollars overall—roughly $4,600 a year versus $980 a year for low-income households and $1,700 a year for middle-income households.

What About Europe?

On Monday, the Trump administration turned down a “zero-for-zero” tariff proposal for all industrial products by the European Union, meant to sway the United States into reversing its 20% duties on imports. These products include pharmaceuticals, plastic machinery, chemicals, and automobiles. The United States has a $350 billion trade deficit with the European Union, bolstering Trump’s desire to have the EU buy more energy from the United States.

Currently, the European Union charges an average 1.6% tariff on non-US agricultural products and 10% on American-made vehicles.

There has been no word on whether the EU will respond with tariffs of its own.

A Word on Elon Musk

On Monday, Elon Musk advocated for the US to ease up on tariffs.

“This tariff escalation is not good for business or innovation. Let markets decide. If we fight over politics, consumers are the ones who lose,” wrote Musk on X.

As it stands, Tesla has a heavy presence in California and Shanghai. The tariffs do not threaten his ability to secure raw materials like aluminum and lithium, which are heavily used in the company’s automobiles. Now, higher import duties are at play, subjecting Tesla to increased pressure. Musk generally supports open global trade with zero-tariff agreements between trading partners.

What Are the Basics of the Tariffs?

The Trump administration’s tariffs call for a flat 10% minimum for all countries outside of Canada and Mexico. Approximately 60 countries are also subject to higher rates, with percentages depending on the types of imports.

For example, there’s a flat 25% tariff on all foreign-made automobiles and a 25% tariff on all steel and aluminum imports (effective as of April 3rd and March 12th, respectively).

The global economy is threatened by mounting economic pressure caused by the Trump administration and the daily drop in the stock market. With the Trump administration’s aggressive tariff strategy, one hopes that negotiations are ultimately successful sooner rather than later. In the upcoming weeks, let’s see if this forms part of short-term economic pain or the start of a hard-to-climb global downturn.

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