Trump's Tariff Regime Disrupts Global Economy, Raises Prices

President Trump's recent announcement of sweeping import tariffs, termed 'Liberation Day', has sparked significant turmoil in global financial markets, with a universal 10% tariff on all imports set to take effect alongside reciprocal tariffs reaching as high as 54% on countries like China. This drastic policy change is viewed by the administration as 'economic self-defense' against long-standing trade imbalances, where U.S. tariffs historically remained low compared to those imposed by other nations. Following the announcement, stock prices fell sharply, with the S&P 500 down over 3%, as investors reacted to the potential economic implications. The bond market, however, saw a drop in 10-year Treasury yields, indicating a flight to safety amidst fears of a trade war, reminiscent of the Smoot-Hawley tariffs that contributed to the Great Depression. Analysts express skepticism about the tariffs' long-term viability, suggesting they may be softened or rescinded due to their unexpected severity and potential to weaken economic growth. The overall sentiment remains cautious as the global economy braces for the fallout of this aggressive tariff regime.