March 04, 2025 11:18 AM UTC

Economy Takes a Nosedive Thanks to Trump Tariffs

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• by: Colorado Pols

President Trump will deliver a joint address to Congress tonight in which he will likely lie his ass off about a whole bunch of topics. One subject he will have trouble avoiding is the increasingly-worrisome state of the economy.

From The New York Times:

Global stocks tumbled on Tuesday as investors’ concerns over the future health of the economy mounted after President Trump’s broad tariffs against Canada, Mexico and China went into effect. [Pols emphasis]

The S&P 500 fell over 1.8 percent, adding to the 1.8 percent loss on Monday that was its sharpest decline this year. The Nasdaq Composite index also dropped over 1 percent, putting the index in what is known as a correction, defined as a drop of 10 percent or more from its recent peak, which was set in December, although much of the sell-off has materialized over the past two weeks.

Investors appeared to rush into the safety of government debt, helping to lower the yield — yields move inversely to prices — on the 10-year Treasury note to its lowest since October.

The drop in yield, however, also signaled mounting concerns about the ability of the economy to withstand incoming tariffs for too long. That concern was also evident in a shift in expectations for the number of times the Federal Reserve will cut interest rates.

Trump may (still) try to toss this at the feet of former President Joe Biden, but only the truest MAGA rube would really believe that excuse at this point.

As The Washington Post explains, this new economic damage is absolutely a self-inflicted wound courtesy of Trump:

As President Donald Trump’s new tariffs on the nation’s three top trading partners took effect Tuesday, China, Mexico and Canada announced that they would retaliate with levies of their own, unleashing a potentially devastating trade war.

China imposed tariffs of up to 15 percent on a raft of U.S. farm products and blacklisted more than 20 U.S. companies, marking a major escalation in a brewing battle between the world’s two largest economies. The move targets some of the United States’ most important exports to China, including soybeans, meat and grains. [Pols emphasis]

Trump is increasing tariffs on Chinese products by 10 percentage points, bringing the total tax on some Chinese products to 45 percent. He also is imposing 25 percent tariffs on goods from Mexico and Canada, in the most serious threat yet to 31 years of free-trade treaties in North America. The levies went into effect at 12:01 a.m. Eastern time Tuesday, after Trump confirmed Monday that he would not extend a month-long delay on his plan.

On Monday evening, Canadian Prime Minister Justin Trudeau decried Trump’s “unjustified decision” and said he would respond with tariffs on roughly $107 billion worth of U.S. products. About $21 billion in U.S. goods would be hit immediately. The remainder would take effect in 21 days, Trudeau said…

…Mexican President Claudia Sheinbaum said Tuesday morning that her government was also prepared to impose retaliatory tariffs. She told reporters that she will announce them Sunday in a rally in the Zocalo, the country’s main square, in Mexico City.

Oy.

Perhaps the only good thing we can say about Trump’s obsession with tariffs is that many Americans are starting to understand how tariffs actually work. According to results from a new Harris poll conducted for Bloomberg News, nearly 60% of Americans believe that the Trump Tariffs will lead to higher prices in the United States; 44% of those surveyed expected the result of the Trump Tariffs to be bad news for the U.S. economy.

As POLITICO reports, Canadian Prime Minister Justin Trudeau is explaining this new “trade war” in very clear terms:

Trudeau denounced President Donald Trump for launching a trade war with his country, saying that he won’t back down from a tariff fight with the United States.

“Today, the United States launched a trade war against Canada. At the same time, they’re talking about working positively with Russia, appeasing Vladimir Putin — a lying, murderous dictator. Make that make sense,” Trudeau said in Ottawa…

…“We don’t want this. We want to work with you as a friend and ally, and we don’t want to see you hurt either, but your government has chosen to do this to you,” he said. [Pols emphasis]

The Nasdaq composite is flirting with correction territory — noted as such when the market falls 10% from a recent high.  The dollar is on the decline along with bond yields. Pro-Trump tech wizards are growing angry with Trump after the announcement last week of a U.S. cryptocurrency reserve. Even the conservative Wall Street Journal has been warning against the Trump Tariffs.

Things are definitely going to get worse before they get better.