r/investing • u/Mountain-Taro-123 • 4d ago

SP500 sinks 4% after Trump's liberation day tariffs, China vows to retaliate on Trump's 54% tariffs, stoking investor fears of a global trade war and recession

It's been noted that the US retaliatory tariffs are not based on other country's tariffs, but rather the import/export trade deficit that the US has with said countries

SP500 is down 4% with consumer tech (Apple), apparel and clothing (Nike and Lululemon), and retail (Dollar General and Walmart) that source many products and parts from China down / hit the hardest

China and other countries are vowing to retaliate with their own tariffs against the US sparking fears of a global trade war and recession.

Noting the last time the US enacted sweeping tariffs through the Smoot-Harwley Tariff Act (which had lower average tariff amounts than those announced yesterday), it lead to a global trade war, reducing imports/exports, failed to bring back manufacturing jobs to the US, and caused the Great Depression. Will history repeat itself?

https://www.ft.com/content/f820e191-348c-4298-b15f-49600be843ce

https://www.china-briefing.com/news/trump-raises-tariffs-on-china-to-54-overview-and-trade-implications/

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u/austrialian 3d ago

The ironic thing about that is that the US was on track to total economic world dominance just half a year ago. Had Trump simply done nothing, the momentum would’ve continued. Now, the only question is how bad it’s going to get for America.

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u/ReturnOfBigChungus 3d ago

The US is the largest consumer market in the world. There is zero chance that every foreign company just decides "well, now there's tariffs, we're not going to sell there". This is a lose-lose situation for most parties, but it's totally unserious to think that this is just going to be bad for the US - there will be many places that are impacted far worse and will eventually have to come to the table to negotiate some kind of arrangement. The US will continue to be the largest and most important economy in the world, it will just be a world that is meaninfully less prosperous.

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u/austrialian 3d ago

Yes, it will be bad for everyone, and I didn’t mean to imply otherwise.

My point was that things were going really well for America, you were outcompeting everyone. Now your GDP is falling and inflation will come back. It’s just economic self-sabotage.

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u/ReturnOfBigChungus 3d ago

GDP growth rate may be falling, but GDP is not. Agree, it is economic self-sabotage. In general tough, the US is pretty well positioned, relatively speaking, for an isolationist trade regime. Basically fully self-sufficient for nearly every important economic input (e.g. energy, food, raw materials, human capital, technology, etc.). The main economic effect here will be domestic inflation.

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u/austrialian 3d ago edited 3d ago

Relatively… maybe. But this whole authoritarianism/anti-immigration thing you have going on (to avoid the F word) does not help at all. The US relies heavily on immigration for both highly qualified (tech, science) and low-paying (farming, service) jobs.

Technology: Leadership relies on human capital and with immigration becoming less attractive and scientists leaving… The future doesn’t look so bright.

Food: Groceries already are very expensive and it’s only going to get worse.

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u/ReturnOfBigChungus 3d ago

I don’t disagree with any of that, but I think you’re overestimating how significant the effects will be particularly on high skilled labor. Scientists and tech workers are not leaving in any meaningful amount. The US is still the best place for those types of jobs. I also doubt the H1B visa programs that import tech and other high skilled labor will be affected long term because of how powerful the tech lobby is, and there will never be a shortage of high skilled labor wanting to enter the US.

Again, all the points you make are valid and I agree, but the lead the US has in those areas is so significant that even with this self-immolation it will still be the most attractive destination for talent, investment, innovation, etc.

Low skill work like agriculture is a totally different story. That’s going to be a mess IMO and I expect food prices and low value-add/low complexity manufactured goods prices to be impacted.

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u/austrialian 3d ago

I respect your opinion, but I think you are underestimating how bad it already is, at least for scientists. It’s more of a trickle right now, but we are only 2 months in. There are three main reasons why the US is unattractive for scientists at the moment:

  • Slashing of funding, uncertainty about existing grants (even in STEM)

  • Political climate, freedom of speech

  • Immigration hassle, fear of deportation or worse

For tech workers, it might look better, because salaries in the US really are something else and they don’t rely on government funds, but the second and third points still apply, even if H1b isn’t going anywhere.

So only time will tell how bad it gets, but I don’t think the US is immune.

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u/ReturnOfBigChungus 2d ago

I don't think the US is immune, but realistically the number of people who are going to leave is, say, maybe a fraction of a percent? Or maybe even if it is really much worse than I expect and a few percent leave. That's still not enough to move the center of gravity for these fields away from the US. It's not like there are a bunch of great alternatives. The situation in Europe is rapidly deteriorating - if you're looking for somewhere with a bunch of funding (or free speech for that matter), you're not going to have a much better time there, especially since European countries economies are weaker and public funding is going to be at risk for the foreseeable future as countries start having to fund their own defense at much higher levels and the economies continue to stagnate.

So that leaves where? Canada? Australia? The market for those kinds of jobs is absolutely TINY compared to the US. There just isn't anywhere that operates at nearly the kind of scale that the US does, certainly not nearly enough to absorb a mass-migration of talent. Even if there are a bunch of people looking to leave, that doesn't mean there are magically going to be positions and funding for research available to them if they move.

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u/austrialian 1d ago edited 1d ago

Your guess as to how many people are leaving is as good as mine; all I have to offer at this point is anecdotal evidence (which, nevertheless, paints a pretty clear picture). Besides, it’s not only about people leaving, it’s also about attracting new talent.

I don’t know why you think the situation in Europe is rapidly deteriorating. With regard to science funding, there are plenty of opportunities at both national and EU levels, especially for excellent scientists. It’s not getting slashed—quite the contrary. Yes, economic growth is a bit low but the EU is not the impoverished wasteland the internet makes it out to be. Freedom of speech is doing very well too.

So yes, I think Europe is more attractive for scientists than the US right now.

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u/blorg 3d ago

You only measure this retrospectively but the Atlanta Fed's forecast has GDP contracting by -2.8% first quarter 2025.

https://www.atlantafed.org/cqer/research/gdpnow

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u/SLTNOSNMSH 3d ago

He doesn't care about "America" it doesn't make sense to view it in this lens.

As long as he preserves/protects whatever is driving him to do these clearly asinine moronic actions that is what matters to him and cronies.

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u/harrison_wintergreen 3d ago

the US was on track to total economic world dominance

wut?

the US is ~25-30% of global GDP