President Trump’s extensive tariffs have already started to generate a significant amount of money for the federal government, a new source of revenue for a heavily indebted nation that American policymakers may start to rely on.

As part of his quest to reorder the global trading system, Mr. Trump has imposed steep tariffs on America’s trading partners, with the bulk of those set to go into effect on Aug. 7. Even before the latest tariffs kick in, revenue from taxes collected on imported goods has grown dramatically so far this year. Customs duties, along with some excise taxes, generated $152 billion through July, roughly double the $78 billion netted over the same time period last fiscal year, according to Treasury data.

Indeed, Mr. Trump has routinely cited the tariff revenue as evidence that his trade approach, which has sowed uncertainty and begun to increase prices for consumers, is a win for the United States. Members of his administration have argued that the money from the tariffs would help plug the hole created by the broad tax cuts Congress passed last month, which are expected to cost the government at least $3.4 trillion.

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Trump’s Tariffs Are Making Money. That May Make Them Hard to Quit. https://t.co/0IaBKVoYff

— tony romm (@TonyRomm) August 3, 2025

Six months ago, few people would have anticipated that the United States would place a 15 percent tariff on exports from Japan, one of America’s closest and most longstanding allies. President Trump had campaigned on the idea of a 10 percent universal base-line tariff, plus a higher levy on China, but it was not clear whether he would follow through.

But on Tuesday, when Mr. Trump announced a trade deal that included a 15 percent tariff on Japanese products — the highest rate those goods have faced in decades — there was a palpable sense of relief. Stock markets in Asia and Europe rose. The Japanese Nikkei 225 surged by over 3.5 percent, while shares of Japanese automakers, which will also be charged a 15 percent tariff on their exports to the United States, jumped more than 10 percent. The reaction is a testament to just how quickly and completely Mr. Trump has transformed the world’s expectations regarding tariffs.

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Trump’s Tariffs Are the Highest in a Century. But After His Threats, They Seem Like a Relief. https://t.co/eevtXIQ4cC via @NYTimes

— ISMAIL (@iamaniku) July 23, 2025

His expensive tax cuts have been signed into law. His steep global tariffs are taking clearer shape. And his twin campaigns to deregulate government and deport immigrants are well underway.

With the major components of his agenda now coming into focus, President Trump has already left an indelible mark on the U.S. economy. The triumphs and turbulence that may soon arise will squarely belong to him.

Not even six months into his second term, Mr. Trump has forged ahead with the grand and potentially disruptive economic experiment that he first previewed during the 2024 campaign. His actions in recent weeks have staked the future of the nation’s finances — and its centuries-old trading relationships — on a belief that many economists’ most dire warnings are wrong.

Last week, the president enacted a sprawling set of tax cuts that he believes to be the ingredients for rapid economic growth, even as fiscal experts warned that the law may injure the poor while putting the U.S. government on a risky new fiscal path.

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With taxes and tariffs in place, Trump takes the reins of the U.S. economy 🇺🇸

Can he steer growth amid rising trade barriers? #Trump #USEconomy #Tariffs #TaxPolicy #EconomicUpdate #MarketWatch #TradeWar #FiscalPolicy pic.twitter.com/pJg4EqK2cK

— @LanCentralCoin – Daily (@CentralNewsYT) July 9, 2025

By the article establishing the executive department it is made the duty of the President “to recommend to your consideration such measures as he shall judge necessary and expedient.” The circumstances under which I now meet you will acquit me from entering into that subject further than to refer to the great constitutional charter under which you are assembled, and which, in defining your powers, designates the objects to which your attention is to be given. It will be more consistent with those circumstances, and far more congenial with the feelings which actuate me, to substitute, in place of a recommendation of particular measures, the tribute that is due to the talents, the rectitude, and the patriotism which adorn the characters selected to devise and adopt them. In these honorable qualifications I behold the surest pledges that as on one side no local prejudices or attachments, no separate views nor party animosities, will misdirect the comprehensive and equal eye which ought to watch over this great assemblage of communities and interests, so, on another, that the foundation of our national policy will be laid in the pure and immutable principles of private morality, and the preeminence of free government be exemplified by all the attributes which can win the affections of its citizens and command the respect of the world. I dwell on this prospect with every satisfaction which an ardent love for my country can inspire, since there is no truth more thoroughly established than that there exists in the economy and course of nature an indissoluble union between virtue and happiness; between duty and advantage; between the genuine maxims of an honest and magnanimous policy and the solid rewards of public prosperity and felicity; since we ought to be no less persuaded that the propitious smiles of Heaven can never be expected on a nation that disregards the eternal rules of order and right which Heaven itself has ordained; and since the preservation of the sacred fire of liberty and the destiny of the republican model of government are justly considered, perhaps, as deeply, as finally, staked on the experiment entrusted to the hands of the American people.

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🇺🇸 This #IndependenceDay, we celebrate the birth of our nation and 250 years of the U.S. Navy defending its freedom.
Since 1775, your Navy has stood the watch—from seabed to space, delivering power for peace—always ready to fight and win alongside our Allies and partners. ⚓🗽… pic.twitter.com/6rNJMsDghg

— U.S. Navy (@USNavy) July 4, 2025

…the One Big Beautiful Bill act (BBB) that passed the Senate on July 1st and the House on July 3rd looks more like traditional tax-cutting, spending-slashing Republicanism worthy of Paul Ryan or Mitt Romney than it does a MAGA fantasy. Suddenly, business leaders are again willing to see Mr Trump as the populist from his first term: a man to be taken seriously but not literally.

Unfortunately, the BBB, which Mr Trump plans to sign into law on July 4th, is likely to cast a shadow over this sunny picture. It illustrates the long-term damage Mr Trump is doing to the foundations of America’s economy.

The bill’s main effect is to extend the tax cuts from Mr Trump’s first term which were due to expire. Republicans paint this as an extension of the status quo. Yet they, like the Democrats before them, ignore the fact that the status quo is unsustainable. Over the past 12 months America’s budget deficit has been an astonishing 6.7% of GDP. If the bill passes, the deficit will remain around that level and the country’s debt-to-gdp ratio will in about two years exceed the 106% reached after the second world war. Revenue from tariffs will help, but not enough to stop the ratio rising—meaning that the drift towards crisis will continue.

To the extent the bill tightens the belt, it does so in the wrong places. As life expectancies rise and the population ages, America should trim handouts to the old, for example by raising the retirement age. Instead, pensioners are getting a tax break and Republicans are cutting Medicaid, health insurance for the hard-up. Some sensible measures include reducing the ability of states to game the system for more federal cash. Yet according to official projections, the overall effect will be to add nearly 12m to the number of Americans without health insurance. That is a scandalous number for the world’s richest big country. Many of those who lose coverage will fall foul of new requirements that recipients must work. Such rules have in the past created an obstacle course of paperwork for claimants while failing to boost employment.

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The panic about tariffs has given way to cautious optimism. But Trumponomics 2.0 will erode the foundations of America’s prosperity https://t.co/d7Z1uq4Eca pic.twitter.com/raYf0JGOOv

— The Economist (@TheEconomist) July 3, 2025

In the days leading up to the final vote, the CRFB assessed that the measure would add between $3trn and $4trn to the deficit. It includes a smorgasbord of tax cuts whose fiscal effects are only partially offset by other reforms. The tax cuts include Mr Trump’s campaign promises to remove tax on tips and overtime pay. In theory those are temporary and will elapse when Mr Trump leaves office. In practice, once taxes are cut they often stay cut (as Republicans’ new accounting method implies). The bill would also set up “Trump accounts” for newborns, including one-off payments to new parents for the next three years. It would give big boosts to spending by the Department of Defence and to Immigration and Customs Enforcement, which the administration wants so that it can increase the number of people deported from America.

Modelling the effects of any legislation on economic growth is hard. But the tax cuts should provide a small boost in the short term. That might help to explain the current exuberance of the stockmarkets. Over a longer timeframe the picture is different (see chart 3). The House’s original bill would shrink America’s GDP by 2% by 2050, according to the Budget Lab at Yale, a research centre. That mainly reflects the impact of a bigger debt load leading to higher interest rates, which squeeze the private sector. Some other forecasters are more optimistic, thinking that the tax cuts will push more workers into the jobs market and incentivise investment, offsetting that impact.

America’s debt surged after the financial crisis of 2007–09 and the covid-19 pandemic. The ratio of debt to GDP is already close to the level reached after the second world war. By extending tax cuts that were set to lapse, without offsetting savings, the OBBB will drive it higher still. According to the CRFB, the Senate’s version as of June 30th would push debt to between 125% and 130% of GDP by 2034—well above the 117% forecast if the 2017 tax cuts were allowed to expire, and higher even than the 124% expected under the House bill….

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America’s Senate has passed the most consequential legislation of Donald Trump’s second term. Here are ten charts to show what impact it could have on the country https://t.co/umZDPjYugs

— The Economist (@TheEconomist) July 1, 2025

This period of 20 years is by no means the first time in U.S. history that military force, economic pressure, and diplomacy have been seen as alternatives to one another, as opposed to tools that must be applied simultaneously, to varying but carefully calibrated degrees, if a recalcitrant adversary is to be effectively constrained. The Trump administration must not repeat the mistake by now attaching too much significance to Saturday night’s stunning demonstration of American air supremacy.

For air power alone cannot suffice. One does not need to accept the cynical critique of Saturday night’s strikes by the former Russian president, Dmitry Medvedev. There are valid reasons to doubt that Iran’s nuclear program has been crippled, as Professor Jeffrey Lewis of the Middlebury Institute has argued. It is not clear what has become of Iran’s roughly 400 kilograms of percent-enriched uranium-235 which, if further enriched, would be enough for up to 10 nuclear weapons. Iranian trucks were on the move around Fordow before the U.S. strikes. So Iran may still have the ability to manufacture centrifuges and to resume enrichment.

It would be pleasing to imagine the amputation of Fordow setting back Iran’s nuclear program so far that it effectively restores the half-century-old non-proliferation regime. And it would not be entirely fantastical. After all, the use of force ultimately consigned the nuclear ambitions of the Iraqi and Libyan dictators to the trash can of history. With the benefit of hindsight, we can speculate that military action might also have thwarted the North Korean nuclear arms program.

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"As Kissinger often said, every success in foreign policy is just an admission ticket to the next crisis," writes Niall Ferguson. https://t.co/FhWGMLTnot

— The Free Press (@TheFP) June 23, 2025

In a moment of political decisiveness and courage, Trump deployed those bombs, despite strenuous objections from the “restrainers” in his administration and parts of the MAGA coalition.

“There’s no military that could’ve done what we did,” Trump said during a brief speech to the nation Saturday night. He is correct. As Niall Ferguson and former Israeli defense minister Yoav Gallant recently noted in these pages, Fordow was essentially impervious to assault. There was one bomb that could cut through its defenses: America’s GBU 57A/B Massive Ordinance Penetrator (MOP). And there was only one plane built to deliver that bomb: the American B-2 Spirit.

“With a single exertion of its unmatched military strength,” Ferguson and Gallant wrote, “the United States can shorten the war, prevent wider escalation, and end the principal threat to Middle Eastern stability. It can also send a signal to those other authoritarian powers who have been Iran’s enablers that American deterrence is back.”

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"Trump Keeps His Promise on Iran. The World Is Safer for It." https://t.co/W4cJn812oU

— LuigiC (@Curini) June 23, 2025

Douglass further argued that paper orders “carry with them a certain moral force which makes them in a large measure self-executing.” The president had pledged to “recognize and maintain the freedom of said persons” and not to repress them “in any efforts they may make for their actual freedom.” Douglass believed the proclamation from America’s commander in chief “would act on the rebel masters, and even more powerfully upon their slaves. It would lead the slaves to run away.” Those who escaped bondage and once feared the claws of the Fugitive Slave Act would have the law on their side.

Although Douglass disagreed with Lincoln about the timing and rationale of emancipation, he predicted that Lincoln’s proclamation would stand as “the greatest event of our nation’s history, if not the greatest event of the century,” placing “the North on the side of justice and civilization, and the rebels on the side of robbery and barbarism.” Douglass and Lincoln alike clearly took inspiration from the Declaration of Independence—America’s first Emancipation Proclamation. Both were committed to realizing the promises of 1776, nearly a century later.

Juneteenth and Independence Day honor the struggle of an imperfect people on an imperfect path to freedom and equality. American history—“a heap of Juneteenths,” in the words of Ralph Ellison—can be read as one journey, full of setbacks and triumphs, toward realizing the truths of the Declaration of Independence. That “ink and paper proclamation,” nearly 250 years old, established a way of life that remains, in Lincoln’s words, “the last best hope of earth.”

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Juneteenth is a day for us to remember with gratitude and admiration all who labored and sacrificed in the righteous–but at the time unpopular–cause of abolishing slavery. It is easy today to be opposed to slavery; it was not easy back then.https://t.co/HPkMsPyDBF

— Robert P. George (@McCormickProf) June 19, 2025

“My Fellow Americans:

“Last night, when I spoke with you about the fall of Rome, I knew at that moment that troops of the United States and our Allies were crossing the Channel in another and greater operation. It has come to pass with success thus far.

“And so, in this poignant hour, I ask you to join with me in prayer:

“Almighty God: Our sons, pride of our nation, this day have set upon a mighty endeavor, a struggle to preserve our Republic, our religion, and our civilization, and to set free a suffering humanity.

“Lead them straight and true; give strength to their arms, stoutness to their hearts, steadfastness in their faith.
“They will be sore tried, by night and by day, without rest — until the victory is won. The darkness will be rent by noise and flame. Men’s souls will be shaken with the violences of war.

“For these men are lately drawn from the ways of peace. They fight not for the lust of conquest. They fight to end conquest. They fight to liberate. They fight to let justice arise, and tolerance and goodwill among all Thy people. They yearn but for the end of battle, for their return to the haven of home.

“Some will never return. Embrace these, Father, and receive them, Thy heroic servants, into Thy kingdom.

“And for us at home — fathers, mothers, children, wives, sisters, and brothers of brave men overseas, whose thoughts and prayers are ever with them — help us, Almighty God, to rededicate ourselves in renewed faith in Thee in this hour of great sacrifice.

“Many people have urged that I call the nation into a single day of special prayer. But because the road is long and the desire is great, I ask that our people devote themselves in a continuance of prayer. As we rise to each new day, and again when each day is spent, let words of prayer be on our lips, invoking Thy help to our efforts.

“Give us strength, too — strength in our daily tasks, to redouble the contributions we make in the physical and the material support of our armed forces.

“And let our hearts be stout, to wait out the long travail, to bear sorrows that may come, to impart our courage unto our sons wheresoever they may be.

“And, O Lord, give us faith. Give us faith in Thee; faith in our sons; faith in each other; faith in our united crusade. Let not the keenness of our spirit ever be dulled. Let not the impacts of temporary events, of temporal matters of but fleeting moment — let not these deter us in our unconquerable purpose.

“With Thy blessing, we shall prevail over the unholy forces of our enemy. Help us to conquer the apostles of greed and racial arrogances. Lead us to the saving of our country, and with our sister nations into a world unity that will spell a sure peace — a peace invulnerable to the schemings of unworthy men. And a peace that will let all of men live in freedom, reaping the just rewards of their honest toil.

“Thy will be done, Almighty God.

“Amen.”

You can listen to the actual audio if you want here and today of all days is the day to do that. Also, there is more on background and another audio link there.–KSH.

DAWN BREAKS ON D-DAY: 6 JUNE 1944. pic.twitter.com/9IBzsZ28UG

— Frank McDonough (@FXMC1957) June 6, 2025

Soldiers, Sailors and Airmen of the Allied Expeditionary Forces:

You are about to embark upon the Great Crusade, toward which we have striven these many months. The eyes of the world are upon you. The hopes and prayers of liberty-loving people everywhere march with you. In company with our brave Allies and brothers-in-arms on other Fronts you will bring about the destruction of the German war machine, the elimination of Nazi tyranny over oppressed peoples of Europe, and security for ourselves in a free world.

Your task will not be an easy one. Your enemy is well trained, well equipped and battle-hardened. He will fight savagely.

Read it all (audio link also available).

6 June 1944, #DDay, when Western Allies begin Operation Overlord in Normandy, 156,000 troops landed by sea & air on five beachheads. In honour of over 4,000 Allied dead, let us pledge ourselves to serve God & one another in the cause of peace & relief of want & suffering. #WW2 pic.twitter.com/gQxCuA2hSH

— Revd Nicholas Pye (@RevdPye) June 6, 2025

Israel had planned to strike Iranian nuclear sites as soon as next month but was waved off by President Trump in recent weeks in favor of negotiating a deal with Tehran to limit its nuclear program, according to administration officials and others briefed on the discussions.

Mr. Trump made his decision after months of internal debate over whether to pursue diplomacy or support Israel in seeking to set back Iran’s ability to build a bomb, at a time when Iran has been weakened militarily and economically.

The debate highlighted fault lines between historically hawkish American cabinet officials and other aides more skeptical that a military assault on Iran could destroy the country’s nuclear ambitions and avoid a larger war. It resulted in a rough consensus, for now, against military action, with Iran signaling a willingness to negotiate.

Israeli officials had recently developed plans to attack Iranian nuclear sites in May. They were prepared to carry them out, and at times were optimistic that the United States would sign off. The goal of the proposals, according to officials briefed on them, was to set back Tehran’s ability to develop a nuclear weapon by a year or more.

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Trump Waved Off Israeli Strike After Divisions Emerged in His Administration – The New York Times https://t.co/g52MRrZclH

— Josh Kraushaar (@JoshKraushaar) April 16, 2025

When Donald J. Trump championed the idea of a 10 percent blanket tariff during the campaign, many people, whether for or against, were taken aback by how radical the idea was.

Alarms sounded about higher inflation, lost jobs, slower growth or recession. The prospect seemed so outlandish that most economists and Wall Street analysts who gamed out the possibilities tended to treat a 10 percent tariff simply as a bargaining tool.

Now, after a rapid-fire series of announcements from the White House that promised, imposed, reversed, delayed, decreased and increased tariffs, the 10 percent solution is looking like the most temperate choice rather than the most revolutionary, especially now that a red-hot trade war between China and the United States is blazing.

Yet 10 percent tariffs have not lost their sting.

Read it all.

Trump Has Threatened Much Worse, but the 10% Tariffs Will Still Sting https://t.co/xIGXwY47tm

— Sean Graf (@seangraf) April 16, 2025

The US economy is set to lose billions of dollars in revenue in 2025 from a pullback in foreign tourism and boycotts of American products, adding to a growing list of headwinds keeping recession risk elevated.

Arrivals of non-citizens to the US by plane dropped almost 10% in March from a year earlier, according to data published Monday by the International Trade Administration. Goldman Sachs Group Inc. estimates in a worst-case scenario, the hit this year from reduced travel and boycotts could total 0.3% of gross domestic product, which would amount to almost $90 billion.

Foreign tourism has been a tailwind for the US in recent years as the cessation of pandemic-era restrictions sparked a resurgence of international travel. But many potential visitors are now rethinking their vacation plans amid increased hostility at the border, rising geopolitical frictions and global economic uncertainty.

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The US economy is set to lose billions of dollars in revenue in 2025 from a pullback in foreign tourism and boycotts of American products https://t.co/FXHmaBn5kY

— Bloomberg (@business) April 15, 2025

One dangerous card that China’s got is its $760 billion holdings in Treasury securities. The country is the US’s second-largest foreign creditor after Japan.

Last week, the 10-year yield jumped by 50 basis points to 4.49%, the biggest weekly surge since 2001. Some of the sharpest moves were occurring during Asian hours, prompting speculation that Beijing was in the market. Will China weaponize and dump its holdings?

Treasury Secretary Scott Bessent brushed this fear aside. In a recent interview with Tucker Carlson, he talked about the beauty of being the world’s biggest borrower. “If you take a bank loan, the bank is in charge, they can repossess whatever you borrowed against. But if you take a big enough loan, you’re kind of in charge of the bank,” he said.

While that’s true in a distressed scenario, the dynamic doesn’t quite work here. Trump’s abrupt tariff U-turn exposed the White House’s Achilles’ heel: He blinked and paused hikes on all nations except China — after watching US sovereign bonds tank.

After all, Bessent, who’s now spearheading tariff negotiations, requires a stable bond market to sell into….

Read it all.

“One dangerous card that China’s got is its $760 billion holdings in Treasury securities. The country is the US’s second-largest foreign creditor after Japan.”https://t.co/xiuAsrNHxb

— Tim O'Brien (@TimOBrien) April 14, 2025

Serious questions now exist around the wisdom of owning American assets that until recently were the envy of a risk-obsessed world.

Amid the manic moves, key trading patterns even bear soft echoes with emerging markets. All told, fear is spreading that Trump’s bid to rewrite the terms of global trade risks imperiling America’s privileged status in the financial system.

“You honestly feel like you’re seeing stuff wrong sometimes. You have to check the scaling on your graphs because prices are moving so quickly,” said Charlie McElligott, managing director of cross-asset strategy at Nomura Securities International Inc. “It’s just a constant stream of bells and popups on the desks right now. Automated messages like risk limits and risk alerts. It’s maximum overstimulation, maximum dopamine saturation.”

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Fear is spreading that Trump’s bid to rewrite the terms of global trade risks imperiling America’s privileged status in the financial system https://t.co/JsjnRyp27E

— Bloomberg (@business) April 11, 2025

In short, the U.S. economy will suffer enormously in a large-scale trade war with China, which the current levels of Trump-imposed tariffs, at more than 100 percent, surely constitute if left in place. In fact, the U.S. economy will suffer more than the Chinese economy will, and the suffering will only increase if the United States escalates. The Trump administration may think it’s acting tough, but it’s in fact putting the U.S. economy at the mercy of Chinese escalation.

The United States will face shortages of critical inputs ranging from basic ingredients of most pharmaceuticals to inexpensive semiconductors used in cars and home appliances to critical minerals for industrial processes including weapons production. The supply shock from drastically reducing or zeroing out imports from China, as Trump purports to want to achieve, would mean stagflation, the macroeconomic nightmare seen in the 1970s and during the COVID pandemic, when the economy shrank and inflation rose simultaneously. In such a situation, which may be closer at hand than many think, the Federal Reserve and fiscal policymakers are left with only terrible options and little chance of staving off unemployment except by further raising inflation.

When it comes to real war, if you have reason to be afraid of being invaded, it would be suicidal to provoke your adversary before you’ve armed yourself. That is essentially what Trump’s economic attack risks: given that the U.S. economy is entirely dependent on Chinese sources for vital goods (pharmaceutical stocks, cheap electronic chips, critical minerals), it is wildly reckless not to ensure alternate suppliers or adequate domestic production before cutting off trade. By doing it the other way around, the administration is inviting exactly the kind of damage it says it wants to prevent.

This could all be intended as just a negotiating tactic, Trump’s and Bessent’s repeated statements and actions notwithstanding. But even on those terms, the strategy will do more harm than good. As I warned in Foreign Affairs last October, the fundamental problem with Trump’s economic approach is that it would need to carry out enough self-harming threats to be credible, which means that markets and households would expect ongoing uncertainty. Americans and foreigners alike would invest less rather than more in the U.S. economy, and they would no longer trust the U.S. government to live up to any deal, making a negotiated settlement or agreement to deescalate difficult to achieve. As a result, U.S. productive capacity would decline rather than improve, which would only increase the leverage that China and others have over the United States.

The Trump administration is embarking on an economic equivalent of the Vietnam War—a war of choice that will soon result in a quagmire, undermining faith at home and abroad in both the trustworthiness and the competence of the United States—and we all know how that turned out.

Read it all.

Trade Wars Are Easy to Lose
My latest. Escalation with China will be Trump's economic equivalent of the Vietnam War. The US will lose bigly. https://t.co/xXRAoMGqHe via @ForeignAffairs

— Adam Posen (@AdamPosen) April 9, 2025

The Trump administration’s high-pressure campaign to deal with Iran’s nuclear program has put U.S. allies in the Middle East on edge that failure at the negotiating table could spark another war.

President Trump has said he prefers a diplomatic solution to stop Iran from acquiring a nuclear weapon, but he has threatened that Iran is “going to be in great danger” if talks don’t go well.

The risk is if talks hit a logjam at a time when the U.S. has piled up military assets in the region and Iran remains vulnerable after Israel battered its air defenses and allies last year, the U.S. or Israel could decide to strike, potentially prompting retaliatory attacks across the Gulf.

In a letter sent to Iran’s supreme leader in March, Trump set a two-month time frame for negotiations to succeed, though it’s unclear if the period was to begin then or once talks get under way. 

Read it all.

The Trump administration’s campaign to deal with Iran’s nuclear program has put U.S. allies in the Middle East on edge that failure at the negotiating table could spark another war https://t.co/eDiSHqqYGm

— The Wall Street Journal (@WSJ) April 10, 2025

After the terror, the euphoria. When, on April 9th, President Donald Trump postponed for 90 days the most illogical and destructive of his tariffs, after a meltdown in financial markets, the s&p 500 index of American stocks rose by 9.5%, its fastest daily rise in nearly 17 years. The darkest scenarios for the world economy that had been envisaged by investors until that moment are now unlikely. It seems there is some limit to the market falls the president will tolerate on his watch. After the chaos that had followed Mr Trump’s announcement of “reciprocal” tariffs a week earlier, that is no small source of comfort for the world.

But do not mistake the consolation of having avoided disaster for good fortune. The scale of the shock to global trade set off by Mr Trump is still, even now, unlike anything seen in history. He has replaced the stable trading relations which America spent over half a century building with whimsical and arbitrary policymaking, in which decisions are posted on social media and not even his advisers know what is coming next. And he is still in an extraordinary trade confrontation with China, the world’s second-biggest economy.

Investors and companies everywhere have been put through the wringer. Global markets crashed in response to Mr Trump’s first tariff announcement. The S&P 500 fell by about 15%. Long-dated Treasuries sold off, as hedge funds were forced to unwind their leveraged positions. The dollar, which is supposed to be a safe haven, fell. After the tariffs were delayed, stockmarkets enjoyed a vertiginous climb. Between its low and high on the day, Nvidia’s value fluctuated by over $430bn.

Even after the tariff pause, however, Treasury yields remain elevated. Global stocks are 11% below their highs in February—and justifiably so

Read it all.

The Economist cover 👀 pic.twitter.com/yIs3oe0hpS

— MAKS 24 🇺🇦👀 (@Maks_NAFO_FELLA) April 10, 2025

If Trump succeeds in extracting rate cuts from the Fed and tax cuts from Congress, the same problem is going to arise. So my assumption is that he will blame the symptoms and will resort to price controls.

The elephantine difference is that US federal debt was 34pc of GDP in 1971. Today it is 122pc on the Fed measure, and galloping upwards. The fiscal deficit is over 6pc as far as the eye can see.

If you think the stock market gyrations of the last few days are terrifying, just wait until Trump destroys the credibility of the Fed and of US treasury debt, the anchor of the global system.

He could order a captive Fed to relaunch quantitative easing and buy the bonds, but to do that when inflation is running hot would be seen by the whole world as naked fiscal dominance. It would set off a price spiral and a collapse of the currency – the sort of outcome seen over the decades in Latin America, or Erdoğan’s Turkey.

Read it all.

✍️ 'The White House’s push for for expanded presidential power threatens US economic stability' | Writes Ambrose Evans-Pritchard

Read the column ⬇️https://t.co/4JMVQeEbMG pic.twitter.com/gmU3CJAZpB

— The Telegraph (@Telegraph) April 8, 2025

Trump has repeatedly promised to make the United States a “manufacturing powerhouse” to avoid being permanently overtaken by its Asian competitors. (In the 1980s it was Japan; now it’s China.) According to the president, friends even more than foes have been “taking our jobs, taking our wealth.” His solution is to impose tariffs on all U.S. trading partners.

There is certainly a constituency for the view that Americans were better off in the past than they are now, and that nineteenth-century policies are the way to go. Christian Whiton, for example, has argued that “reasonable tariffs, Jacksonian defense policy, and immigration control [will] set [the] stage for peace and prosperity after turbulence.”

In reality, however, applying policies that were appropriate more than a century ago, when the U.S. enjoyed all kinds of advantages as a location for manufacturing, will cause something worse than turbulence.

With his assault on “globalism,” Trump stands as much chance of success as a British prime minister who proposed to reassemble the empire, or a German chancellor who attempted to restore the Hohenzollerns to the throne. Time’s arrow does not fly backward.

Read it all.

“Trump’s Tariffs and the End of American Empire” https://t.co/Qby7iZ0RnC

— Niall Ferguson (@nfergus) April 6, 2025

If you failed to spot America being “looted, pillaged, raped and plundered by nations near and far” or it being cruelly denied a “turn to prosper”, then congratulations: you have a firmer grip on reality than the president of the United States. It’s hard to know which is more unsettling: that the leader of the free world could spout complete drivel about its most successful and admired economy. Or the fact that on April 2nd, spurred on by his delusions, Donald Trump announced the biggest break in America’s trade policy in over a century—and committed the most profound, harmful and unnecessary economic error in the modern era.

Speaking in the Rose Garden of the White House, the president announced new “reciprocal” tariffs on almost all America’s trading partners. There will be levies of 34% on China, 27% on India, 24% on Japan and 20% on the European Union. Many small economies face swingeing rates; all targets face a tariff of at least 10%. Including existing duties, the total levy on China will now be 65%. Canada and Mexico were spared additional tariffs, and the new levies will not be added to industry-specific measures, such as a 25% tariff on cars, or a promised tariff on semiconductors. But America’s overall tariff rate will soar above its Depression-era level back to the 19th century.

Mr Trump called it one of the most important days in American history. He is almost right. His “Liberation Day” heralds America’s total abandonment of the world trading order and embrace of protectionism. 

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“Ruination Day”: The new Economist cover amid Trump’s tariff war.

Trump has launched a global trade war, calling it a “Liberation Day.” As an economist, I know a thing or two about tariffs. So here are some predictions of what we should expect if this tariff war continues.

1/n pic.twitter.com/9uvVTcskmr

— Roman Sheremeta 🇺🇸🇺🇦 (@rshereme) April 3, 2025

Donald Trump is holding a gun to the head of Volodymyr Zelensky, demanding huge reparations payments and laying claim to half of Ukraine’s oil, gas, and hydrocarbon resources as well as almost all its metals and much of its infrastructure.

The latest version of his “minerals deal”, obtained by The Telegraph, is unprecedented in the history of modern diplomacy and state relations.

“It is an expropriation document,” said Alan Riley, an expert on energy law at the Atlantic Council. “There are no guarantees, no defence clauses, the US puts up nothing.

“The Americans can walk away, the Ukrainians can’t. I’ve never seen anything like it before.”

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Trump now threatens Europe with assisting Putin in rebuilding his war machine if Zelensky doesn’t sign over Ukraine’s resources.https://t.co/jhRH9B0aeE

— Jay in Kyiv (@JayinKyiv) March 27, 2025

Donald Trump has already raised the average tariff on America’s imports by about twice as much as he did in his entire first presidency. Just as damaging, though, has been the uncertainty about what comes next.

After April 2nd—“Liberation Day”, Mr Trump calls it—there will be another round of levies. The president promises 25% tariffs on all imported cars and country-by-country “reciprocal” tariffs based on how much his administration objects to a counterparty’s trade and tax policies. Will these plans change? Who knows? Mr Trump’s use of emergency powers means that he can do as he pleases.

This freedom may suit him. It does not, however, suit America’s businesses, which have no idea how bad the trade war will get; nor its consumers, who fear future inflation. The liberation America needs is from the paralysing uncertainty brought about by Mr Trump’s chaotic approach.

Since the president came to office, hefty tariffs on Canada and Mexico have twice been announced only to be mostly postponed. A long-threatened 10% levy on China has doubled in size.

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The unpredictability of Trump’s tariffs will increase the painhttps://t.co/pstoI6GTl7

— Dennis Kendel (@DennisKendel) March 27, 2025

Rapturous applause and a sea of phones in the air greeted President Trump as he walked on stage and declared, “The golden age of America has officially begun.”

He was barely a month into office when the Saudi-backed investor conference in Miami captured the optimism. “The Nasdaq is up nearly 10% in just a few months,” Trump said, ticking through a list of economic indicators. “The Dow Jones Industrial Average is up 2,200 points.” On the same day, Feb. 19, the S&P 500 hit an all-time high.

But as Trump unleashed an on-one-day, off-the-next tariff fight with America’s largest trading partners, those gains unraveled. In just a few weeks, the S&P lost $4 trillion in value driven by his whipsaw trade policy, receding optimism about an artificial-intelligence boom and souring consumer sentiment caused by threats of higher prices and weaker growth. A measure of consumer sentiment fell in March for the fourth straight month to the lowest level since January 2021, the Conference Board, a business-research group, said Tuesday.

Markets in the past week have recovered some losses, but Trump is preparing his next shock: an April 2 “liberation day” suite of reciprocal tariffs he said will be applied on any trading partner that charges tariffs or imposes other trade barriers on U.S. products.

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Required reading from @NickTimiraos
It's not just uncertainty. It's uncertainty paired with powerlessness. Business leaders now feel vulnerable.https://t.co/mUnpNDYA3V

— Peter Atwater (@Peter_Atwater) March 26, 2025

Credit rating group Moody’s has warned on the US fiscal outlook, saying President Donald Trump’s trade tariffs could hamper the country’s ability to cope with a growing debt pile and higher interest rates.

The rating agency said on Tuesday that America’s “fiscal strength is on course for a continued multiyear decline”, having already “deteriorated further” since it assigned a negative outlook to America’s top-notch triple A credit rating in November 2023.

While Moody’s highlighted the “extraordinary” economic resilience of the US and the role of the dollar and the Treasury market as backbones of the global financial system, its analysts also warned on Tuesday that the policies of the second Trump administration — including sweeping tariffs and plans for tax cuts — could do more harm than good for government revenues.

“The potential negative credit impact of sustained high tariffs, unfunded tax cuts and significant tail risks to the economy have diminished prospects that these formidable strengths will continue to offset widening fiscal deficits and declining debt affordability,” Moody’s said.

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Moody’s warns on deteriorating outlook for US public finances https://t.co/xE1wjdoa8u

— Financial Times (@FT) March 25, 2025

Buried in China’s latest government budget were some numbers that add up to an alarming trend. Tax revenue is dropping.

The decline means that China’s national government has less money to address the country’s serious economic challenges, including a housing market crash and the near bankruptcy of hundreds of local governments.

Weak tax revenue also puts China’s leaders in a box as they square off with President Trump, who has imposed 20 percent tariffs on goods from China and threatened more to come. Beijing has less spare cash to help the export industries that are driving economic growth but could be hurt by tariffs.

The drop in tax collections leaves China’s leaders in an unfamiliar position. Until the last several years, China enjoyed robust revenue, which it used to invest in infrastructure, a rapid military buildup and extensive industrial subsidies. Even as economic growth has slowed gradually over the past 12 years, taking a dent out of consumer spending, tax revenue held fairly steady until recently.

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China’s Government Is Short of Money as Its Leaders Face Trump https://t.co/ElmQsX47Dt

— Michael Standaert (@mstandaert) March 21, 2025

President Trump said the US and Russia are already talking about dividing “assets” as part of a push to end the fighting in Ukraine, the latest sign that he may be preparing to sacrifice Kyiv’s interests when he speaks with Vladimir Putin on Tuesday.

One objective of the call is expected to be getting the Russian president to agree to a 30-day ceasefire that Trump proposed this month and Ukraine has agreed to. Putin has been noncommittal so far, saying he accepted the idea in principle but wants certain conditions to be met.

“Tomorrow morning I will be speaking to President Putin concerning the War in Ukraine,” Trump said Monday evening in a social media post. “Many elements of a Final Agreement have been agreed to, but much remains.” Those remarks, along with Trump’s comments to reporters Sunday night that the two sides were already talking about how to divide assets, suggest that many decisions have already been made — with or without Ukraine.

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President Donald Trump said the US and Russia are already talking about dividing “assets” as part of a push to end the fighting in Ukraine, the latest sign that he may be preparing to sacrifice Kyiv’s interests when he speaks with Vladimir Putin https://t.co/VssbS4Uy1T

— Bloomberg (@business) March 18, 2025

Some firms may even intend to quietly pare back their investment plans. In 2017 Foxconn, a Taiwanese maker of electronics, vowed to spend $10bn on a plant in Wisconsin that would employ 13,000 people. Mr Trump visited the proposed site, proclaiming it the “eighth wonder of the world”. Yet after much watering down of plans, the company said last year that it had spent just $1bn on the project, and created only 1,000 jobs.

Faced with American tariffs, some foreign companies could instead direct their attention elsewhere. That has been the case with Chinese firms, which bore the brunt of the duties imposed during Mr Trump’s first term. The flow of greenfield FDI from China to America slid from $8.2bn in 2016 to $6.5bn last year. According to Morgan Stanley, listed Chinese firms generated around a quarter of their foreign sales in America in 2024, down from roughly a half in 2016. Instead, they have turned to the fast-growing economies of the global south.

If Mr Trump’s objective is to encourage foreign businesses to build in America, there are more effective policies at his disposal than tariffs. On the campaign trail the president also promised to slash red tape. Tortuous planning processes have long held back American manufacturing. For foreign firms, fixing those would be far more motivating. 

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Will Trump’s #tariffs turbocharge #foreign #investment in America?
Companies from #Asahi to #TSMC are expanding production in the country—for nowhttps://t.co/ga2y1Ryoxw pic.twitter.com/kNAGIbbRpA

— pebbleone (@TACITWR) March 17, 2025

The sell-off shows no sign of stopping. America’s S&P 500 index dropped by another 3% on March 10th, leaving the world’s most watched stockmarket down by almost 9% since its peak last month. The NASDAQ, dominated by tech firms, has fallen by 13%. It is not quite the bold new era of American growth that President Donald Trump had in mind.

His unpredictable trade policies got things going. Tariffs of 25% on imports from Canada and Mexico—which were instituted on March 4th, before being suspended for a month on March 6th—top investors’ list of concerns. But after years of impressive growth, the future of the American economy is a growing source of anxiety, too, with worries provoked by a steady drip of discouraging data. Such news is beginning to undermine belief in American exceptionalism: after all, investors have seen much better returns in China and Europe this year. And as is often the case when markets fall, each development has revealed fresh things to lose sleep over.

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After years of impressive growth, the future of the American economy is a growing source of anxiety. If the president wants to turn things around, which does not yet appear to be the case, it may take something big https://t.co/sGcNyWtmqB

— The Economist (@TheEconomist) March 11, 2025