Markets in Turmoil Ahead Trump’s Surprise Tariffs – Everyone is “Flying Blind” in Reality:

Everything and everyone from foreign nations to investors, CEOs, and skilled professionals in finance are succumbing to panic due to a vacuum of information. This phenomenon is especially true in the circumstances surrounded by Trump’s tariffs that are seemingly yet unexplored. In the next half an hour, CEOs are expected to jump out the fantasy world and cross swords with reality when Donald Trump appears on stage. This meeting will transform global politics as we know and understand it. Starting from the 4 pm ET set deadline, everything and anything is still up for crazy last second changes.

In comparison to the rest of the population, the sub elites sheltered behind closed doors appear to be holding the reigns of power tightly memed behind the ‘flying blind into a storm’ metaphor. Just under an hour ago, Rob Subbaraman a chief economist from Nomura Holdings said this to us over a call. Until wars are overseas and America has fences that must not be crossed everywhere, all the “reciprocal” tariffs twinkling with promises will have no substance. That being said, no countries are willing to match American reality, the rest of the world is anything but simple.

Who's in Danger?

While Trump hasn't assigned blame to anyone yet, there is certainly a list of probable suspects. The Trump team has described the European Union, Mexico, Canada, Japan, South Korea, Vietnam, and India as the “unfair” trade practice offenders.

China is undoubtedly in the crosshairs, facing a 20% cumulative surtax on all its exports to the United States.

Bloomberg Economics cites $33 trillion dollars of economic trade at stake. Countries like Brazil, China, Canada, and those in Southeast Asia might see a plummet in exports to the U.S. by 90%.

The Economic Shockwave

If Trump fulfills the most extreme version of his plans, U.S. average tariff rates will soar by 15% within the year. The most aggressive planning is predicted by Goldman Sachs which suggests core inflation would skyrocket, economic growth would dwindle, and unemployment rates would prevail.

In addition, auto manufacturers in Mexico and Canada would cease to engage in trade, severely impacting China, India, the EU, and the US as they would face stagnation in oil exports collapsing their economies entirely in contrast to Southeast Asia facing wider economic decline.

Adding all these funnels alongside the sudden influx of migrants hitting social services, the economy would plunge, slashing 4% from the estimated GDP and causing a 2.5% increase in prices over the following years.

Déjà Vu: Am I Experiencing Stagflation Again?

According to analysts, it seems that history is about to repeat itself with the phenomena of stagflation, which is characterized by slow economic growth accompanied with high inflation. This is closely linked to the 1970s oil shock period.

“This could repeat that same painful experience,” Shang-Jin Wei, a professor at Columbia University’s Business School and former chief economist for the Asian Development Bank, expressed his thoughts.

Lingering Questions

Even the Rose Garden briefing is likely to invite unresolved interrogatives, such as the following for example:

What are the finalized import tariff quotas charged by each country on each item?

How will engaged countries react?

Will the businesses or end consumers take the hit or will they try to fight back?

As of this moment, major allies of the United States like Canada, the EU, and Mexico have expressed that they will attempt to mitigate the damage. It has been reported that China, as a response to prior tariffs placed by the United States, has made counter responses that are relatively tame. Reports indicate that Vietnam is increasing the purchase of American supplies to shield itself from the dangerous grip of Trump.

Business Leaders Losing Faith While Stocks Are in a Downward Spiral

The bittersweet truth is that the U.S. gold price has increased exponentially, while the dollar ‘Weaker’ and the treasury yield has surged alongside U.S. stocks posting their worst quarter onset in 2023. Lets not forget that in the midst of all this, the value of stocks has nearly dropped trillions along with the market cap value.

While some optimists hope that there is still a light at the end of the tunnel in the form of trade deals appearing from the disorderly chaos, many have begun to devote a more critical outlook towards the long lasting implications.

“It’s clear that this is being monitored with concern by the global business community,” said John Denton, secretary general of the International Chamber of Commerce. “To recalibrate the world’s biggest economy with so much ambiguity is a very risky bet.”Denton goes on, “As the world is waiting with bated breath, they are primarily asking themselves, what will Trump say, and what will the ultimatum be?” This just goes to show how tariffs during Trumps presidency may not only change the way we see trade, but could also shift the tide altogether.