April 3 2025

Tariffs Reshape Global Trade, Biggest Economic Change Since WWII

Trump’s Tariff Blitz Overview

Global Stocks Fall as Trump’s Trade Overhaul Sparks Fears

Excerpt: Let’s Talk Tariffs

Brazil Aims to Gain in Trade War

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1. Tariffs Reshape Global Trade, Biggest Economic Change Since WWII

The tariffs announced yesterday are unlike what President Trump enacted in his first term, and what President Joe Biden kept in place through his term. The new policy amounts to the largest change to the global trading system since World War II, 80 years ago. The effective rate of the 2018 Trump tariffs was around 2%, while analysts estimate the new average rate to be between 15-25% (though that's likely to change).

The new rates are at the upper end of what markets were expecting. Stock markets may fall in the coming days but they will be coming down from an elevated level, so in absolute terms this doesn't necessarily signal the economy is in major trouble. Applying tariffs was never about Wall Street, it was about Main Street. Markets did extremely well over the last 30+ years without tariffs, Main Street did not. That's precisely the point.

The economic effects of this policy will take months or years to manifest, ignore short-term commentary and market movements. The fundamental thesis is that these tariffs will make it more expensive to build things in other countries and then import them into America, leading to more factories and jobs in the US. But it takes time for a company to decide to build a plant in America, actually construct it, and to hire US workers.

The political impacts of this change will be more immediate. Since 2016, there has been a realignment of who supports which political party in America. The working class has increasingly become Republican, while the Democratic coalition has become more highly educated and wealthier. Of course, not all workers are Republicans and not all PhDs are not Democrats, but that is the trend. More educated, wealthier Americans tend to own more stocks than workers, who stand to benefit from more domestic, higher-paying jobs. The two political coalitions have opposing interests, at least in the short term. The tariffs also risk elevating inflation, which nobody likes. Those dynamics and the ratio of pain to gain will ultimately dictate whether these tariffs are popular.
Source: Citizen Journal

2. Trump’s Tariff Blitz Overview

Donald Trump has launched an assault on the global trade order, imposing a barrage of tariffs on US imports in a move that sent financial markets reeling and deepened fears over the world economy’s health. In measures he billed as a way to “liberate” the US economy, the president said on Wednesday that a levy of 10 per cent would apply to nearly all US imports from April 5. The White House also revealed sweeping “reciprocal” tariffs on goods from a host of America’s biggest trade partners, as Trump took aim at a global trading system he said had “ripped off” the US for decades. Tariffs on China, the world’s biggest goods exporter, will rise to more than 54 per cent after Trump imposed a further 34 per cent duty on top of 20 per cent levies he placed on the Asian nation this year. The EU will face total tariffs as high as 20 per cent, while imports from Japan — one of Washington’s closest allies — will face tariffs of 24 per cent. There is a 10 per cent tariff on UK exports. America’s average tariffs will rise to their highest in decades, Wall Street banks estimated. The reciprocal tariffs are due to take effect on April 9.
Source: FT

3. Global Stocks Fall as Trump’s Trade Overhaul Sparks Fears

Investors dumped stocks and fled for the safety of Treasuries as President Donald Trump’s bid to remake the world trading order threatened to undermine economic growth. The dollar headed for its steepest drop in two and a half years. US assets were among the worst affected, with futures on the S&P 500 slumping more than 3%. In premarket trading, stocks linked to global trade bore the brunt, with Apple Inc. down about 7%. Other big US technology names including Amazon.com Inc., Dell Technologies Inc. and Tesla Inc. all fell more than 4%. Apparel and shoe makers, including Nike Inc. and Deckers Outdoor Corp, slid about 11%, as hefty tariffs were imposed on Vietnam and other production hubs. It was a similar picture in Europe, where consumer goods firms including Adidas AG and Puma SE fell almost 10%. The Stoxx 600 index slipped 1.5%. Asian stocks posted heavy losses earlier, with Tokyo’s Nikkei index losing almost 3%. [US] 10-year yields [fell] eight basis points toward the psychologically key 4% mark. The moves rippled through bond markets worldwide, with 10-year yields in Germany and Britain down about eight basis points, while Japanese and Australian borrowing costs dropped more than 10 basis points.
Source: Bloomberg

4. Excerpt: Let’s Talk Tariffs

Donald Trump ran and won on the promise to restore American manufacturing. His signature economic tool for doing so are tariffs and he has wasted no time implementing them, posting on his social media platform that he will impose tariffs on China, Mexico, and Canada. Tariffs, the imposition of a tax on foreign imports to make domestic industry more competitive, are not new to America (they were in place for much of the 19th and early twentieth centuries), but they are new to the modern economy. There is not much evenhanded discussion about tariffs out there. They are either very bad (mainstream media, academia) or will succeed bigly (MAGA). This article seeks to be a balanced discussion of the advantages and disadvantages of tariffs, which through his rhetoric and personnel appointments, Trump is going to enact.

The need to have a domestic manufacturing economy is illustrated by America’s experience in WW2. On the eve of war in 1940, America accounted for about 50% of all global manufacturing output. The US quickly converted this massive civilian manufacturing industry into wartime production. In 1940, America produced about 330 tanks, 6,000 aircraft, and 200 ships per year. By the peak of the war in 1944, America was producing 17,500 tanks, 96,000 aircraft, and 2,500 ships per year, dwarfing all allies and opponents.

Read the rest of my article here
Source: Citizen Journal

5. Brazil Aims to Gain in Trade War

In the unfolding global trade war, Brazil is betting it has some distinct advantages. Chinese buyers are already stockpiling Brazilian soybeans as Beijing retaliates against President Trump’s tariffs with levies on U.S. agricultural producers. Brazilian suppliers of everything from cotton to chicken are banking on higher Chinese demand. The commodities-heavy Brazilian benchmark stock index is up 9% this year through Tuesday’s close, while the S&P 500 is down 4.2% over the same period. The preparations reflect a trade relationship between Brazil and China that has expanded significantly in recent years. Rich in beef, iron ore and oil, Brazil has raw materials that China’s vast population needs. China, meanwhile, has capital that Latin America’s biggest economy needs to build much-needed infrastructure.
Source: WSJ

April 3, 1973: A Motorola engineer makes the first known call from a handheld cell phone. The 2.2-pound brick-size device, called the DynaTAC, wouldn’t become commercially available for another decade, when it carried a price tag of about $4,000.

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Sources

1. Citizen Journal
2. https://www.ft.com/content/fe5f7469-6f04-40e6-bc59-0d4e004e1cd3 (FT)
3. https://www.bloomberg.com/news/articles/2025-04-02/stock-market-today-dow-s-p-live-updates (Bloomberg)
4. https://www.adastraperaspera.us/news/lets-talk-tariffs/ (Citizen Journal)
5. https://www.wsj.com/world/americas/brazil-us-china-trade-war-tariffs-ccfb9a6b?mod=Searchresults_pos1&page=1 (WSJ)