📈 Tariff Chaos Explained

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Good morning!

Markets just had their worst day since the pandemic after Trump dropped sweeping tariffs on nearly every major U.S. trading partner. Tech, retail, and auto stocks all took hits, and the so-called “reciprocal” tariff math? Not so reciprocal after all.

Grab your flat white and let’s break it down ☕️👇️ 

Markets

Wall Street had a brutal day yesterday after former President Donald Trump announced a broad set of new tariffs, triggering the sharpest market sell-off since the early days of the pandemic.

• The Dow Jones fell nearly 1,700 points, a 4% drop

• The S&P 500 slid 4.8%

• The Nasdaq tumbled 6%, marking its worst day since March 2020

The new policy includes a minimum 10% reciprocal tariff on nearly all U.S. trading partners, along with country-specific tariffs on 60 nations. Trump framed the move as a response to what he described as years of unfair trade, citing not only tariffs but also non-monetary barriers and other forms of “cheating.”

Major partners like China, Japan, and the European Union are among those facing higher rates.

According to BNP Paribas strategist Daniel Morris, the scale of the announcement surprised many investors, and the uncertainty now centers around whether negotiations are still possible. Here’s the impact so far.

💻️ Tech Stocks Drop after $140B Worth of PC Imports included in tariffs
Dell, HP, and Apple took a take a major hit after Trump announced steep new tariffs, 34% on Chinese goods and 25% on imports from Mexico, countries critical to their supply chains. The tech giants rely heavily on both for sourcing components.

🛍️ Retailers’ Stocks Melt Down on Tariffs. These Held Up
Retail stocks plunged Thursday as Trump’s tariff shock hit harder than expected, especially with steep duties on imports from key Asian nations that supply most U.S. consumer goods. Consumer discretionary fell 6%, the second-worst performing sector, dragged down by losses in apparel, footwear, and electronics retailers. However, off-price chains and grocers held steady, even as companies sourcing from Southeast Asia, which supplied 26% of U.S. apparel imports in 2024, scrambled to assess the damage.

🚘️ Auto stocks slide on tariff news: Ford down 5.9%, GM down 4.3%
Automakers took a hit Thursday as tariff fears rattled the industry. Ford dropped 5.9% to $9.50, while GM slid 4.3% to $45.90 and Stellantis tumbled 9.4% to $10.20 by market close. Non-U.S. carmakers also saw sharp declines, reflecting broad concern over new import duties.

Ok, so the impact was large, outside of stocks falling, Treasury yields briefly dipped below 4% for the first time since October, as markets priced in rising economic risks from Trump’s trade war.

Meanwhile, the U.S. dollar weakened, losing ground to the euro, yen, Swiss franc, and British pound amid a shift toward safe-haven currencies.

🪖 Which countries will hit back – and which likely won’t?
Canada, China and the EU are expected to hit back. Meanwhile, other Asian nations and the UK seek deals.

While ASEAN nations may avoid direct retaliation, their pivot toward closer trade ties with non-U.S. partners could still hurt American exporters long-term, weakening U.S. influence in key global supply chains.

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Quick News

• Trump Says TikTok Deal Within Reach, Involves Multiple Investors.

• Wall Street has most to lose from trust lost.

• Forecasters were revising the outlook for the U.S. economy Thursday, seeing greater recession risks.

• Morgan Stanley recently wrote that investors are underappreciating the potential impact of tariffs on Vietnam.

• China’s response to new U.S. tariffs will likely focus more on stimulus, building trade ties.

• BP chair Helge Lund to step down after oil major pledges strategic reset.

• Why the dollar is doing what it's not supposed to do.

One of the most intriguing stories for us over the past 48 hours was how the tariffs were calculated.

Trump’s Tariffs Aren’t Really Reciprocal, Here’s Why

Trump’s new tariffs claim to be “reciprocal,” but the math tells a different story. The formula? Take the U.S. goods trade deficit with a country, divide it by total imports from that country, then cut that number in half, with a minimum tariff of 10%.

In the strangest of Tweets, Kush Desai, White House Deputy Press Secretary tried to argue that this wasn’t the case, despite tweeting the formula that proved that it was the case. 🤷 

That’s how China ended up with a 34% tariff. But this has nothing to do with what countries actually charge the U.S., in tariffs or regulatory barriers. The White House even confirmed it didn’t calculate those for most countries.

Instead, the goal is to eliminate U.S. trade deficits, not to match other nations’ trade practices. And in some cases, like the UK, which doesn’t have a goods deficit with the U.S., tariffs were still imposed.

So while marketed as “reciprocal,” these tariffs are arbitrary, inconsistent, and far from balanced.