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Live updates: US stocks drop again as uncertainty reigns about Trump's tariffs (apnews.com)

submitted 1 week ago* (last edited 1 week ago) by [email protected] to c/[email protected]

13 comments fedilink hide all child comments

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.

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[–] [email protected] 32 points 1 week ago* (last edited 1 week ago) (1 children)

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

[–] [email protected] 6 points 1 week ago* (last edited 1 week ago) (1 children)

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%)

[–] [email protected] 1 points 1 week ago* (last edited 1 week ago)

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"!