Trump declared economic war on the entire planet. As a result, the stock markets are predictably crashing again.
Stock market crashes were something of a regular occurrence during the previous Trump term. Now that Trump is back in power, we are witnessing the return of that. At the end of Trump’s last term, the top 20 Dow Jones point losses were nothing but Trumps greatest crashes:
This is basically the stock performance of Trump’s first term in a nutshell. So, the fact that stock market crashes have once again become a regular occurrence is really not all that surprising.
Indeed, the original imposition of a 25% tariff, that triggered a stock market crash. In response, Trump, after witnessing the crash on Fox News, panicked and delayed the tariffs. After the 30 day delay expired, the tariffs were back on, the stock markets crashed by 1,300 points in two days. This caused Trump to panic after seeing this on Fox News and he partially lifted the tariffs.
Trump then began experimenting with specific sector tariffs, seemingly thinking that this would trigger a less severe stock market crash. He experimented with the idea of lumber and dairy tariffs and threatened to impose them only to trigger a 1,400 point crash on the Dow Jones over two days.
Then there was the steel and aluminum tariffs which triggered another 500 point stock market crash. The problem there was that Trump was becoming emboldened and decided that the markets were going to crash, so all you have to do is grit your teeth and bear with it. This with messaging where he said that there will be short term pain for long term gain (spoiler alert: there is no long term gain to be had). Up to that point, stock markets were the last deterrent preventing Trump from being a complete and total idiot. Now that he’s decided that stock market crashes are normal, he feels free to completely bury the US economy for very self-inflicting stupid reasons.
Yesterday, just after the stock markets closed, Trump announced his so-called “Liberation Day” (or, more appropriately, Liberation from Wealth and Prosperity Day) where he went ahead and imposed his longer term plan of declaring economic war on the entire planet. In it, he held up a cardboard poster and read off different countries names and what he plans on imposing for his alleged “reciprocal” tariffs. Stock markets were up when Trump suggested that he was going to be “kind”, but apparently, but being “kind”, Trump meant that he was imposing a baseline of a 10% tariff on everyone and imposing half of a tariff on countries of whatever made up number he came up with for what he accuses other countries of imposing on the US.
In response to this insanity, analysts were calling the move ‘worse than the worst case scenario’ that they were anticipating. The Dow futures almost immediately plunged by 1,000 points last night. Today, the markets headed further south with the Dow Jones plunging by a whopping 1,679.39 points (which amounts to a 3.98% drop). So, in a current chart for the single daily point losses, this would place this as the 5th biggest point stock market crash of all time. Here’s a screenshot before this has been added:
Already, Trump has notched on entry with a late 2024 1,100 point drop to take 11th place. That will move to 12th place spot thanks to today’s stock market crash. Also noteworthy is that a vast majority of entries still on that list were from Trump’s first term in office.
One could go into the details of which companies were hit hard, but the short and easy answer is “pretty much everyone”.
Now, the question at this point is if there is any logic behind the imposition of these tariffs in the first place. Well, basically, the answer is “no”. Essentially, the numbers that Trump was putting in the poster he showed off were basically completely made up. From TechDirt:
Let’s pause for a moment to appreciate what Surowiecki discovered. The administration didn’t just make up random numbers — that would have been too simple. Instead, they invented a formula that manages to be both more complicated and more wrong: they took our trade deficit with each country and divided it by that country’s exports to us.
So for Indonesia, the math went like this:
- US trade deficit with Indonesia: $17.9 billion
- Indonesia’s exports to the US: $28 billion
- $17.9B ÷ $28B = 64%
- Therefore (according to this logic), Indonesia must be charging us the equivalent of a 64% tariff
This is roughly equivalent to calculating your coffee shop’s markup by dividing how much coffee you buy from them by how much coffee they buy from you. Which would make sense if you were in the coffee business, but you’re not.
When confronted about this methodology, the administration didn’t backtrack. They just admitted it:
“The numbers [for tariffs by country] have been calculated by the Council of Economic Advisers … based on the concept that the trade deficit that we have with any given country is the sum of all trade practices, the sum of all cheating,” a White House official said, calling it “the most fair thing in the world.”
Whoever on the Council of Economic Advisers used this formula should turn in their econ degree, because this is not how anything works.
Indeed, just because one country buys more from another country doesn’t inherently mean that there is “cheating” of any kind. Still, it does explain a lot including the fact that the Trump administration imposed tariffs on an island uninhabited by people:
Now, you might notice a bunch of these entries show a flat 10% tariff rate. That’s what happens when a “country” has no trade with the US at all — the formula defaults to the minimum. A mildly competent team might have wondered why these places have zero trade with us and done a quick check before declaring economic war on them.
But this team isn’t mildly competent. This team is extremely, profoundly, impressively incompetent.
So let’s look at who exactly we’re launching a trade war against, starting with the Heard and McDonald Islands. Total population: zero human beings. The only residents are some absolutely stunning penguins. You can actually adopt one if you want — though I suppose that may now cost 10% more, thanks to Trump’s tariff.
But that’s not even the best part. Just a few lines up, you’ll find the “British Indian Ocean Territory,” also known as the Chagos Islands. Nearly all of the humans currently on these islands are US military personnel at the Diego Garcia base. And they’re only there because, as detailed in a recent Behind the Bastards podcast, the British government forcibly expelled all the native inhabitants to lease the territory to the US military.
Let that sink in for a moment: Donald Trump just imposed tariffs on our own military base. On territory we lease. Where the only residents are US military personnel.
Yeah, that alone is a pretty big epic fail on top of this already massive epic fail going on here.
On the plus side, the rest of the world is now waking up to the nonsense that Canada, Mexico, and China have been dealing with if they haven’t already woken up to it already (a lot have actually been giving a collective “WTF?” to the treatment of Canada as it is). At the very least, all of this lends even more credibility to my original open letter back in early February where the world should team up and fight back against the Trump insanity. While there is plenty of bravado to go it alone and channel national pride, it is wiser to form alliances and ensure that we all have a fighting chance against the fascist insanity enveloping the US right now. In fact, it is this very idea that Trump explicitly freaked out about late last month. So far, the only indications I heard was just a more generalized diversification of the Canadian trade portfolio (which is helpful, to be fair). The stock markets are no longer stopping Trump and unless the world reacts collectively, then Trump is going to start picking off countries one at a time.
What’s going to be interesting to see is how much further the stock markets plummet. Is this going to be a one day thing or is the markets going to continue to slide as hopes fade that Trump might come to his senses for once and back off of this insanity. That’s unlikely to happen and, in all likelihood, trade relations with the US are going to burn, injuring all involved.
