Trump's Tariffs Wipe Out over $6T on Wall Street in Epic Two-Day Rout

I was bringing this up with a guy yesterday who was genuinely supporting the policies and somebody chimed in that they were not worried at all, because everyone wants to trade with the big boy in town. Trust is not important if they are afraid of you (I'm paraphrasing). Quite a different perspective, but it is consistent with an observation I made about a lot of US comments, people are quite happy for their country/government to engage in tactics (e.g. bullying, industrial espionage even against partners...) that they are enraged if others (E.g. China) do it. Europeans seem to be much more susceptible to an "if you don't want it to be done to you don't do it to others" argument.

https://www.retailcouncil.org/u-s-hits-185-nations-with-tari...

> No new tariffs were announced for Canada. Canada and Mexico’s exemption for USMCA/CUSMA qualifying goods was maintained. However, 25% tariffs on non-USMCA compliant Canadian goods, Canadian steel and aluminum, Canadian autos and parts, and the 10% tariff on Canadian energy exports remain in place.. there are signs that negotiators on both sides are trying to steer Canada-US trade to a more productive process of an expedited renegotiation of the Canada-US-Mexico Trade Agreement (CUSMA).

More context on US trade policy: https://news.ycombinator.com/item?id=43589350

To the extent markets recover it will be because there’s confidence that exposure to bizarre and unpredictable behavior from the US has been reduced.

EU / China trade pacts, China / California, Mexico / EU. People have to patch around the mistaken over-reliance on sanity from the US. It’ll happen, not sure if it’ll take a few weeks or a few years though.

If you remember he blew up TTIP, TTP/TTPA during his first mandate.

> I'm tempted to think (hope? dream?) that the markets and trade will rebound if all this chaos makes American politics swing back

The pump'n'dump scheme against Ukraine will forever change how small countries see the US support for democracy, even if it changes back to the previous status-quo.

The people who voted for these policies have to feel a sufficient amount of pain from them to be sure they won't just vote for them again as soon as they get the chance. Most people who voted for Trump in 2024 would vote for him again if he ran for a 3rd term. Nobody can consider America a reliable partner until that isn't a laughable possibility again.

Things are easier to break than they are to fix. The next president, if there will be another, will not be able to easily glue the pieces back together.

> Hopefully for the US they won't go in a similar crisis like the UK is going through...

Err.. do tell about the UK's larger crisis than US'?

This. There is no reason why any country should trust us anymore if entire trade relations can be destroyed by a presidential whim.

Even if Trump fell out of a window today and we got a pro-trade president tomorrow, we’re not fixing this damage for a very long time.

We probably would have to amend the constitution to insulate foreign policy from the whims of a single person if we want any chance of fixing this in our lifetime.

The US wasn't even in a crisis until 2025. We weren't in a stellar position (high deficits and debt, low unemployment but high underemployment). It was all recoverable before Trump started this trade war and doing things like cutting departments that actually brought in revenue.

On top of all of their other preexisting and pending crises..

The next president is going to be Trump. If people don't think that's at least a serious possibity they are extremely deluded about the situation the country is in right now.

When he started with a limited set of tariffs on Canada/Mexico/China it sort of made sense as a bullying move. The administration at least had the bandwidth to conduct three sets of negotiations.

But it’s essentially impossible to negotiate 180 deals simultaneously. No way does Tunisia get even five minutes to pitch a deal - the simultaneous imposition of tariffs effectively DDOS’d the negotiation team.

When the bully gets too ambitious the large number of bullied gang together for revenge, or at least effective countermeasures. The world will route around USA, find they can manage ok without it. The USA will be iced out, lose its reserve currency status, nobody will buy its military technology, making the USA unable to recoup large outlays for ambitious military projects, and the USA will lose its military dominance.

Also, the future of warfare and terrorism is autonomous networks of drones. Mexico and Canada won't be disposed to care what passes through their borders with the USA, and like Zelensky said ... we had the oceans and friendly neighbors, but that won't help us anymore.

EDIT: minor corrections

Totally agreed! But bulling 95% of the class room... That doesn't work. New alliances would emerge, like Canada and the EU. No more new pipelines for the US but more upgrades to Canadian ports to ship oil to the EU. New economic routes will be created, new partner deals, etc... Without the US.

Trump just locked the US, kinda did the finger to the earth, and hopes people will come begging for trade.

Also for many countries it can’t be remedied because the tariffs are based on trade imbalances (not reciprocal, that is a lie). What does the US make that Cambodia needs/wants? There’s no way for them to close the gap on trade other than to stop selling to the US.

And yet even after stiffing the contractors, the casinos still went bankrupt.

It’s a culture thing.

I think the combination of malice and incompetence remains the most credible theory:

Trump believes that the he/the US has the more powerful position in all of these relationships and wants to impose his will on the rest of the world and make them submit to his/US superiority. Which might actually work if he picked one target at a time. But you can't beat up the whole school at once. The fact that he can't do this to everyone at once, combined with his utter misunderstanding of what trade imbalance actually means, will lead to an outcome that is bad for everyone, but worse for the U.S. than most.

There are two other theories that I think have some shred of credibility, and they're both worse:

1. Trump intends to use his apparent ability to unilaterally impose or negate these taxes at will on a granular level to force countries, companies, and individuals to come groveling to him for favors, allowing him to use the presidency to further enrich and entrench himself.

2. Trump is divesting of dependence on allies because he thinks they might soon be adversaries. That's the most harrowing potential interpretation, but it relies on the notion that he has any kind of foresight. This is really only credible if you genuinely believe that it's Putin pulling his strings. Which is a possibility that's hard to dismiss.

When the markets are down, they are on sale for the rich. Eliminating competition via tariffs is good for those who want to compete where they couldn't before. They would let everything burn to further enrich themselves or push their ideology.

This is charitable.

But they were supposed to eat other people’s faces. You know THOSE people.

This type of comment is boring and doesn’t really advance the discussion.

I used to enjoy HN but it seems to have developed into these sorts of comments quite quickly.

Leopards getting purchased instead of Abrams.

The episode of the Search Engine podcast “The puzzle of the all-American bbq scrubber” goes into detail on an example of this, is very interesting and makes the same points you’re making here.

I'm fairly convinced it's easier feel like there is some plan, even if a bad or sinister one, than things being in a state of genuine chaos.

You occasionally see the people jumping between different ideas as to what the underlying plan is, once events no longer support their initial idea.

These people all have a shared idea of what they're doing, and since they sit in financially-backed echo chambers, those ideas eventually turn so absurd that they appear to have no idea of what they're doing.

Why would shareholders want to tank the value of their shares?

And what is the solution?

It's the simplest explanation and also the one with the most evidence

I don't think of it as the classic conspiracy in the sense of a La Cosa Nostra meeting in Apalachin.

It's more like a shared set of ideas, and those ideas are crazy, at least if you don't have a net worth that is enough to ride out all but the most historic of social upheavals. And part of avoiding that most historic of social upheavals is not laying off people for the sole profit of it, at least not without a good excuse.

Every major financial crisis since (at least) the 80's has resulted in a "K shaped recovery" in which the 99% are forced by circumstance to sell off assets to the wealthy at bargain prices.

Agreed. It’s very rare to get a group of shareholders to agree that the price of their stock should go down.

That is what I believe I also just read... I was just telling my girlfriend that Hackernews is the smarter, tech oriented reddit. Better go fix that.

Not "the shareholder class" but the actual super wealthy, those few thousand individuals at the top.

A way I have recently seen this put is that if you have a billion dollars another billion doesn't do that much for you in real terms. But if you're a billionaire who likes to sexually harass your child's nanny, you would much prefer she be desperate and precarious rather than economically secure or with a lot of other viable options. This is one crude example but the dynamic is in play in many other situations.

So idk, it's plausible to me that the class interests of the wealthy extend beyond mere wealth accumulation. I can imagine circumstances where they would be willing to give up some of their absolute wealth in exchange for greater relative wealth.

Agree. This sounds like the simplistic "billionaires were the problem all along" take, which is, TBF, not that different from Trumpism. The only difference is the choice of enemies who are responsible for all our problems.

You haven’t said anything.

It's too late, these actions have shown how truly fragile and arbitrary USA policy is, and extreme anti-current-rules-based-order views are rampant in USA politics. Policy will be volatile and no multinationals or governments will want to deal with the chaos.

Reversing the actions would require either a 2/3 veto proof majority or Trump realizing he is wrong, both of which will probably take a while...

X-Com: Enemy Known, where you're forced to play with a certain squad leader who is always either out of Time Units, panicking, or mind-controlled, and a 99% hit chance is not really 99%.

> virtually guaranteed!

I feel like you might be confused about the statement. One platform gives 58% odds, the other gives 64% odds. This is obviously high, but also very far from virtually guaranteed. In 100 trials, we’d expect recession in ~60 events. There is no secret math hidden here, it’s just that.

Actually, that's not what I've found. When I have compared betting sites like Kalshi and Polymarket to the implied probability of Fed rate cuts in the interest rate futures market, I have found them to match up and move in lock step with each other. (I don't work for any of these companies and I don't use the betting sites myself; just stating my observation.)

The betting site did predict Trump will win the election.

It's already happening. Klarna canceled their IPO. So did StubHub. I think it's a safe bet that all planned IPOs have been canceled for the time being.

What souls did Silicon Valley ever have, c'mon srsly

Yes, abd this appreciates USD, in turn makes production costs in US high, so the rest of the world doesn't buy what US produces.

It is by itself sustainable though as US doesn't only export produced goods but tech etc which the world wants. A valuable dollar funds this tech, in a sense whole world funds the US trch sector.

You’re right about all you say. But the US has struggled to implement even the simplest forms of industrial policy because other countries are so extremely price-competitive, and our markets so unbridled, that our “elites” have eroded our industrial base to drive shareholder returns.

If not through tariffs, how else do you force reindustrialization? Industrial policy will always fail if it’s driven by a chimeric political system where both sides are incentivized to grow “The Economy” by eroding domestic capacity.

The CHIPS Act is too little, too late (when you’re competing with a fast-accelerating rival that is simultaneously your largest debt-holder and main industrial base).

> unfathomable that a nation in such a privileged position would decide it's tired of such a systematic set of advantages.

That's just the thing, you've got it exactly backward! The US has been "looted, pillaged, raped and plundered by nations near and far," and it's far less rich than it should be.

Icarus is taking flight, the rest of the universe better watch out. And for those stuck getting carried along toward the sun... tough shit, there's not going to be enough time to convince a population of born and bred narcissists that it's really hot up there before the meltdown.

Is there any relationship between reserve currency, national security and power projection? https://apnews.com/article/shipbuilding-china-united-states-...

> In only two decades, China has grown to be the dominant player in shipbuilding, claiming more than half of the world’s commercial shipbuilding market, while the U.S. share has fallen to just 0.1%, posing serious economic and national security challenges for the U.S. and its allies, according to a report released Tuesday by the Center for Strategic and International Studies. In 2024 alone, one Chinese shipbuilder constructed more commercial vessels by tonnage than the entire U.S. shipbuilding industry has built since the end of World War II.

Yes, it is a liability, because in exchange for your reserve currency status you are indebting your country. Gradually, as you outsource more and produce less, your country derives more and more of its returns from soft economic assets (financial markets, legal structures, software, pharma, IP, etc.), than hard economic assets (commodities, energy, manufacturing, transportation, logistics, etc.).

In the long run, this hollows out your industrial base, drives income inequality (because labor is devalued when products/soft assets have zero marginal cost of replication), and defangs your country.

Said differently — vertical integration is the key to “innovation” in the abstract. You can see this with BYD.

With the above in mind, let’s say your goal as a country is to develop your industries so you can achieve vertical integration. Soft economic assets are easier to bootstrap once you have hard economic assets. If you lose your hard economic assets and only have soft ones, you are at a strategic disadvantage because your opponent (in this case China), can bootstrap their soft assets relatively quickly. By comparison, it will take you much longer to get your hard assets back (through the mythical process of “reshoring/reindustrialization”).

All that being said, this is not a commentary on the effectiveness of the tariff policy of the Trump administration.

Yes, that's exactly what a liability is! US currency is an IOU. The more of it out in the world the less value there is in America's domestic assets.

You and I don't get to print money. Other classes do.

>Almost all the trade deficit numbers being thrown around by the US administration don't include trade in services which the US generally has a large surplus.

Then why don’t other countries tax US services? I don’t even hear this from anyone in the media too

What about these tariffs would cause the millions/billions of non-paying users to stop using the free service that is facebook?

> Trump hates or doesn’t believe in knowledge

shortened that for you

My comment may be naive but digital services do not have tariffs. Given the unpredictable manner of Trumps tariffs wouldn't this encourage more startups and companies to focus on exporting digital services instead of focusing on physical goods? If so there could be minimal increase in goods produced in US and instead US consumers just absorb the price rise of goods with the consequences that arise from that.

> created solely by Trump

Nitpick: No, the entire Republican party is at fault here.

They willfully ignored every warning, and attacked the people giving the warnings. They promoted him, protected him in two impeachments, eventually re-elected him, and actively confirmed his cabinet of sycophants instead of requiring some adults in the Oval Office. Then they took specific steps to block anyone from challenging his "national emergency" against our neighbors, by declaring that the rest of the year simply "doesn't count" for the 15 day timer in the original legislation. [0]

Some Republican legislators may have had hard-choices for securing their own re-elections, but they still chose this route.

[0] https://thehill.com/homenews/house/5189410-house-gop-democra...

I would argue that China is just playing the game and EU should do too while it lasts. No time for sophistication in a street fight, this is not chess.

Yeah, that's the uncertainty we all have to face. I hope they find some local jobs at least.

I don't even know what I can do if I can't find an IT job. I don't have any other skills.

You owe tax on the difference between contributed dollars and converted dollars. So if you contributed $100 and it historically had grown to $150, you would owe tax on $50 to convert.

If that $150 in value is suddenly $120 instead, your tax bill to convert is significantly cheaper.

Rebuy equities/reinvest dividends at reduced prices, pay taxes now, enjoy tax-free growth. If the current admin is serious about trying to get rid of income tax, then that would eliminate a major advantage of trad vs roth.

Because you have to pay taxes on it when you convert, and you will have less to pay taxes on if you do it now.

ROTH contributions grow tax-free. Doing your conversions now allows you to buy equities are they're currently discounted prices, maximizing your potential long-term tax-free gains.

Lower absolute taxes

What’s the sample size of significant downward moves in the market during the existence of BTC?

Often yes but sometimes they both go down. However bonds don't decline as fast. The actual strategy I follow is stock/bond/short-term. The short term is like a buffer currently invested in short term treasury fund. Think of it like a game. If stocks are low then sell bonds and when that is also low then use the short term investment to live on to wait out the market recovery. Also if you are retired like me you would tighten expenses when drawing from the short term during a downturn.

> Bonds and stocks tend to have an inverse correlation.

Careful with this, it's not always true and which kind and duration of bonds is important.

European stocks where down even more than US stocks today (although not down nearly as much yesterday)

Maybe all the billionaire owners of these stocks can go storm the capital together?

Trump has consistently avoided consequences from breaking the rules.

You can’t fight someone like that within the rules, and right now the left will throw anyone who starts breaking the rules in jail while consistently being unable to hold the opposition accountable.

It’s enforced self destruction.

What can be done?