The hullaballoo that Trump has unleashed on the globalized world is reverberating through financial markets, fracturing longstanding alliances, and reconfiguring the global order, setting the stage for a potential economic confrontation with unpredictable security ramifications. China has vowed to resist Trump’s approach to the bitter end, while the European Union says it's ‘ready to negotiate’ over more US natural gas purchases and has proposed a zero-tariff deal to the U.S. but simultaneously gears up for a potential trade war. Singapore has openly denounced the U.S. tariffs, stating that such measures are “not actions one does to a friend.” In contrast, England and South Korea appear reluctant to challenge the new tariffs, opting instead to pursue new agreements to navigate this shifting landscape. At the same time, the White House evokes memories akin to those of Gettysburg...
White House is a real-life political circus
More tariffs come tomorrow
At the same time, the US trade representative Jamieson Greer confirmed to the Senate Finance Committee that “higher reciprocal tariffs” will go into effect tomorrow on China, Japan, the European Union, and more major economies. Greer acknowledged that conversations are ongoing, and “many countries have said they won’t retaliate, some have already lowered tariffs”, but he said there is a “distinct difference” in the case of China, which has not sought to negotiate.
Trump’s tariffs to ‘undermine the fabric of the US’
In a stark warning to the global community, Ian Goldin, a professor of globalization and development at the University of Oxford, spoke to Al Jazeera about the ominous implications of Trump’s tariff policies. He stated, “There’s a very low chance” that these tariffs will yield any positive results". The consequences, he warned, could be disastrous: “We will see higher prices that will hinder efforts to reduce interest rates.”
The specter of rising costs looms large, as Goldin cautioned that “if prices go up considerably, we might face even higher interest rates.” He added a glimmer of hope that falling oil prices might alleviate some inflationary pressures due to a slowdown in economic growth. However, this is but a faint beacon in dark waters, as Goldin predicted a trajectory of “very slow or recessionary growth in the U.S.”
The professor also raised alarms about the broader consequences of Trump’s tariff strategy, foreseeing a profound deterioration in international relations and a threat to “the fabric of the U.S.” He warned that the tariffs would have “a very negative impact on inequality,” suggesting that the very constituents who supported these policies would find themselves bearing the brunt of the fallout. “These jobs will not come back,” Goldin grimly concluded, “and they will face higher prices for many imported goods.” The specter of economic turmoil hangs heavy in the air, leaving a cloud of uncertainty over the American landscape.
Short selling goldmine
The plunge in U.S. stocks has proven to be a goldmine for short sellers, who raked in a staggering $127 billion on paper since last Wednesday—the day Trump unveiled his sweeping tariffs. According to data from Ortex Technologies, short sellers have seen their windfall grow significantly, with total gains for U.S. firms with market capitalizations of $1 billion and greater reaching a colossal $189 billion as of Monday.
Short selling, the practice where investors sell borrowed shares with the hope of buying them back later at a lower price, has become a favored strategy amidst the turmoil. With Trump's announcement of extensive tariffs targeting U.S. trading partners, the market reacted dramatically, leading to a jaw-dropping decline of approximately $5 trillion in market value for the S&P 500 index alone.
The appetite for short positions surged, with short interest across various global stock indices climbing rapidly from March 31, peaking on Friday before beginning to taper off, according to Ortex data. As volatility engulfs the markets, short sellers are laughing all the way to the bank, pocketing profits as uncertainty reigns supreme.
More Trumpists call for a pause on tariffs
Billionaire hedge fund manager Bill Ackman, a prominent supporter of Trump, has voiced his backing for the President’s tariff plan aimed at addressing “unfair practices” from trading partners. However, he’s calling for a “30, 60, or 90-day” pause before these tariffs are implemented. In a social media post, Ackman, who has endorsed Trump’s 2024 election run, argued that this pause would create an opportunity for countries to negotiate with the U.S. and prevent a major global economic disruption that could harm the most vulnerable companies and citizens.
“If a country does not negotiate in good faith, then [President] Donald Trump can bring the hammer down,” Ackman stated. “But doing so without giving time to make deals creates unnecessary harm.” His remarks come after he publicly criticized Commerce Secretary Howard Lutnick, accusing him of being “indifferent to the stock market and the economy crashing.” Although Ackman later apologized for suggesting that Lutnick could profit from the tariffs through his bond investments, he reaffirmed his concerns regarding Trump’s tariff strategy.
“I am just frustrated watching what I believe to be a major policy error occur,” Ackman lamented, emphasizing that the country and the President had been making significant economic progress that is now at risk due to these tariffs. His comments highlight a growing unease among investors about the repercussions of the tariff plans and the potential impact on the U.S. economy.
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