President Trump on Saturday touted his tariff regime as an “economic revolution” and told businesses to “hang tough” in the face of widespread market panic.
Why it matters: Economists say a recession is highly likely, potentially even a dire stagflation scenario, as Trump fundamentally re-orders the global economy.
Catch up quick: Trump took to social media early Saturday to defend his tariffs, after one of the worst two-day routs in stock market history.
- “THIS IS AN ECONOMIC REVOLUTION, AND WE WILL WIN. HANG TOUGH, it won’t be easy, but the end result will be historic,” the president wrote.
- That followed a post Friday night in which he said big businesses were “not worried about the tariffs” because of the sweeping budget and tax bill being negotiated.
Yes, but: Investors lost more than $6 trillion the last two days, just in the U.S. stock market, because of fears about the impact of those tariffs.
What they’re saying: “What these tariffs are going to do is make the cost of production much more expensive,” University of Rhode Island economist Nina Eichacker wrote in a Saturday blog post.
- “Workers are going to take this on the chin as their employers try to cut costs.”
Between the lines: The full reciprocal tariffs don’t start until April 9, but the economic impacts are already kicking in.
- Reuters reported a key supplier to both Airbus and Boeing may stop shipping parts if they are hit by tariffs.
- Some car makers have already started suspending shipments to the U.S.
- Economists warn certain grocery prices could rise in a matter of days, especially things like coffee, chocolate and perishable produce.
The bottom line: The tariffs Trump unveiled Wednesday were far more severe than the market expected. Now, the question is whether they stick or not.
- “Whether we will have a recession or not depends on the duration of this shock,” Apollo chief economist Torsten Slok wrote Friday. “If these levels of tariffs stay in place for several months and other countries retaliate, it will cause a recession in the US and the rest of the world.”
