Stocks are tumbling with the Nasdaq moving down over -500 points before closing down ONLY -335 points. The Nasdaq was up 713 points at session highs. Ouch
The S&P is closing down -79.48 points or -1.57% after trading as high as 205.22 points. Ouch.
The Dow closed down -320.01 points after trading as high as 1461.00 points at the highs. Ouch
The market started its move lower after WH press secretary Levitt said the 104% cumulative tariffs will go into effect on China goods at midnight. Not only that, she – the administration – says it with pride/arrogance, which is weird.
Unless the Trump administration changes their mindset that there has to be no trade deficit and that all things need to be made in the USA, the US will continue to shoot themselves in the foot, and the market will punish that mindset. So far, Trump is not listening.
The fact is, corporations made the decision to move production overseas, much like I choose to buy at Costco vs my local grocery store for stuff. I feel I can get a better deal there. What does Costco do with my money? They pay their workers they improve their service, they give me and my 89 year old mother $1.50 hot dogs and a soda on most Saturdays, amongst other things.
Since I shop at Costco, they have stuff from China. Why? It is cheaper. They source bananas from wherever, and coffee from wherever. I don’t ask, I just make an economic decision and I like the price, the quality, and the quantity. I assume they source the best deals.
Now enter government who wants to get involved where corporations chose not to because it did not make sense for them, given the needs, costs and all the other things that go into making a car or a piece of clothing or growing and harvesting bananas in an environment that is conducive to growing bananas.
Government would rather I don’t eat bananas, or would rather I spend $60K for the average car price (I think it is $48K)? Government would rather divert resources to industries that don’t exist today? With immigration shut off and population getting older and unemployment at 4.2% and housing in short supply, who will build the factories anyway?
As Adam posted, there are better ways to solve the US economic grievances. Adam proposes raise corporate taxes among other things.. My fear is there are ways to defer/ avoid taxes. “Where there is a will there is a way” especially with regard tax bills, and that includes all that goes on with lobbyist – and such – who make Nancy Pelosi and others (she is not the only one) multi-millionaires on the salary of a civil servant. However, if that can be solved with a restructuring of the tax code, maybe the US can get somewhere.
Other than that, another solution to economic grievances may be to look at big ticket items like defense spending. At the start of the administration, Trump proposed that Russia and China get together and decide “no more nukes” as he reasoned that each already has enough to kill everyone multiple times over. That makes sense and saves money in the process. Russia has economic troubles, China has economic troubles. The US has economic troubles. That makes economic sense for all, and you keep your current nukes just in case – you just don’t build more.
Moreover, if you want global peace (end Gaza, and Ukraine wars) and/or also want other countries to pay for their own defense (and they seem to be willing to do that), why is the US now touting spending more on defense that will be obsolete and likely not used (especially if successful in bringing peace not war)?
Instead, we now get these headlines.
Add to that, Trump wants to have a communist like parade for his birthday with military stuff on display. Geez. What are you trying to tell Russia/China?
One day, the US will have a robot to make sneakers and be able to compete. Why not wait until it can happen? Until then, focus on things that make more economic sense vs a blanket 104% tariff and markets puking in response. ?
Get your act together and think. DOGE with all its faults, is looking like the best idea so far.
PS. Pres. Trump just said that the US will take in $2B per day on tariffs. What is that vs US federal government spending? I asked ChatGPT.
Wait until the subsidies are kickstarted and $2B becomes something less.
PSS I then asked how much market capitalization was lost in the US stock market in the last week of trading?
I don’t know…. Sometimes “it is best to leave well enough alone”. In addition, “sometimes it is also best to leave your ego at the door”.
There may a “pot of gold at the end of the rainbow” for Pres. Trump, but my inkling is you “play with fire and you might get burnt”.
The US/global stock markets are crashing and burning.
