How to ruin a healthy economy in 100 days: Trump’s big promises that he hasn’t kept
Trump got reelected to the White House in part to “fix” the US economy. 100 days into his second term and the US is bracing for a recession of his making.
When Donald Trump was running to regain the White House, he said that he was going to bring down prices and that the stock markets would soar. However, 100 days after his inauguration there are concerns that inflation could return, Wall Street is licking its wounds, and Americans are bracing for an economic downturn.
These ails can be traced back to one of his signature promises during the 2024 campaign, that he was going to implement tariffs in order to bring jobs back to the United States. The steepness, sweeping and erratic nature of the import taxes though caught many by surprise and set off a global trade war.
How to ruin a healthy economy in 100 days
The US stock market did surge after Trump won the 5 November 2024 presidential election. However, when he announced in February that he was going to slap stiff tariffs on goods from Canada, China and Mexico, US markets began to drop.
Then a full-on rout commenced when he unveiled his ‘Liberation Day’ tariffs. On top of a 10% base levy across the board, his administration placed additional “reciprocal” tariffs on many nations that were 50% in some cases.
He’s pulled back on the reciprocal tariffs for most nations but has left in place 25% levy on imported steel and aluminum as well as increased tariffs on Chinese goods that have risen to as high as 145%. China has retaliated with its own tariffs on some US goods of 125%.
Consequences of Trump’s tariffs: market turmoil and potentially higher prices
Stock markets plunged in the wake of Liberation Day, the S&P 500 was down 18.9% on 8 April from its February peak and $6.5 trillion was wiped off its market value. The index has since regained some of its loses but was still down by a little more than 10% from its peak.
Trump pulled back on most of the reciprocal tariffs after investors began dumping US bonds, normally considered a ‘safe haven’. Typically when there is a sell-off in the stock markets, investors plow money into US bonds. That sparked concern among experts that the US was losing its standing as a stable and predictable place to store money.
It could also mean bad news for US consumers in the form of higher interest rates when borrowing for mortgages and car loans, among other forms of debt.
Additionally, US consumers will likely be facing higher prices on the goods they buy as companies pass on the increased price of imported goods to customers. For example, car dealers across the nation are encouraging people to buy a car now before they raise costs because of tariffs.
There is the potential down the road for another rash of inflation similar to that that occurred after the pandemic as well. Walmart and Target warned Trump in a meeting that US shoppers are likely to have DeJa’Vu, seeing empty shelves and higher prices.
Bloomberg reports that according to figures cited by a veteran shipping industry executive, John McCown, the number of canceled sailings from China was 60% higher in April than any month during the covid-19 pandemic.
Freight companies are reducing their capacity and ports are preparing to layoff workers due to the drop in orders. If and when China and the US reach an agreement and shipping surges again, bottlenecks in the system will once again send prices skyrocketing.
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