Update: Annnnnd It’s Gone! Didn’t even last a day, folks. As long as this criminal administration remains in power, the economy is all downhill from here.
Updated headline 1: Live updates: US stocks give up an early gain as clock ticks down to Trump’s new tariffs
Original headline: US stocks rise as global financial markets show signs of relief
Original post body: Huge shout-out to AP News for providing context and saying the loud parts, even if quietly.
Today’s sudden market rise follows a historic pattern: Some of the best days in the market’s history have been clustered around some of its worst days. The biggest gain for the S&P 500 since World War II was an 11.6% surge on Oct. 13, 2008, for example. That was during the depths of the Great Recession.
Emphasis mine.
This has happened before. The stock market is irrational and volatile, and a bounce back does not mean the economy will be okay. It won’t. The administration’s own sources that “justify” and “calculate” their tariffs confirms that it will only hurt the US economy.
The Office of the U.S. Trade Representative released its methodology and cited an academic paper produced by four economists, including me, seemingly in support of its numbers. But it got it wrong. Very wrong. I disagree fundamentally with the government’s trade policy and approach.
Alberto Cavallo, Gita Gopinath, Jenny Tang and I studied the tariffs placed on Chinese exports in 2018 and 2019. (This is the “Cavallo et al.” reference in the government’s methodology.) We found that tariffs of, say, 20 percent caused domestic importers to pay nearly 19 percent more. This represents a pass-through into import prices of about 95 percent, which is the value I would have plugged into the government’s tariff formula. In simple terms, that implies that the price paid for U.S. imports would rise almost as much as the tariff rate.
[…] Wednesday’s reciprocal tariffs will bring average tariff rates to their highest level in over 100 years. Their breadth is striking, hitting large economies such as China and Europe, and also small developing and emerging-market countries including Jordan and Zambia. And despite being billed as a “do unto others” trade policy, they are not calculated in line with the Bible’s golden rule.
I would strongly prefer that the policy and methodology be scrapped entirely. But barring that, the administration should divide its results by four.
Emphasis mine. https://web.archive.org/web/20250408161636/https://www.nytimes.com/2025/04/07/opinion/trump-tariff-math-formula.html
It’s also worth noting that even the administration’s own formula assumes a tariff pass through rate of 25%. Obviously this is much, much lower than the 95% Cavallo calculates, but even taking the administration’s numbers as being accurate, they’re still saying that prices will rise by 25% of the tariff rate.
The average weighted global tariff across all affected goods is now 40%. By Cavallo’s numbers that means a 38% average increase in the price of all imported goods. But even by the administration’s incredibly sunny numbers, they’re still saying that all prices on imported goods will rise by at least an average of 10%. That’s, effectively, a new 10% tax on most of what you buy.
(Also, because of how much of what the US buys comes from China, that 40% weighted average will go higher if Trump applies additional tariffs on China, as they apparently intend to, to the order of over 100%)
Great points! And these price increases aren’t just important for the consumers. Profit margins are thin enough as it is. Entire businesses will close because they simply can’t afford to continue operating.
A sudden 10-100% increase in cost of materials will cripple the very industries these tariffs are supposed to “protect”!
Dead cat bounce?
It more like schrodinger cat
☹️
Writing articles like this before close seems like a choice
It’s already trending downward.
It’s just to prevent the poors from making money on the obvious drop. Its still going to tank
Ive watched about 5 years of stock gains evaporate all the way up to closing today.
What sudden rise did I miss?
A rumor floated that Trump would pause the tariffs, so stocks temporarily shot up until the white house confirmed that the rumors weren’t true, and then they dropped back down.
And its gone.
Roll tide.
yeah its funny how by the time a headline on the market is out its wrong for what its doing atm. Its really all just down and not quite as down as before.
