Yes, No, Yes, No – Trump’s Tariff Chaos Driving U.S. Into Recession, Stock Market Loses $4 Trillion

Yes, No, Yes, No – Trump’s Tariff Chaos Driving U.S. Into Recession, Stock Market Loses $4 Trillion


March 13th, 2025 by financetwitter



Can Trump make up his mind whether his tariffs against Mexico and Canada will proceed? Apparently, he can’t because flip-flopping is part of his strategy. His latest U-turn happened on Tuesday (March 11) when, within hours, a declaration to slap a 50% tariff (up from existing 25%) on Canadian steel and aluminium imports – in retaliation to Canada’s 25% tax on electricity exports to the U.S. – has been cancelled.

Prior, the POTUS flip-flopped on the North American tariffs on March 7, delaying implementation on goods covered in the 2020 US Mexico Canada Agreement (USMCA) – including nearly 40% of US energy imports from North America – by 30 days, until April 2. Two days earlier (March 5), Trump said he would temporarily spare carmakers from 25% import levies just a day after they came into effect.

Mr Trump has engineered a series of U-turns which began in February when he announced 25% tariffs on Canada and Mexico, only to suspend them two days later before implementing them again – except for automobiles. About US$1 billion in trade enters the U.S. from Mexico and Canada each day that does not claim duty-free exemptions under USMCA, since it has historically enjoyed low or no tariffs.


Thanks to such abrupt policy shifts, the U.S. economy is already starting to show the effects of the disruption from Trump’s policies. It becomes so confusing and frustrating that some analysts think Donald Trump is “manufacturing” a recession. On Monday (March 10), after falling more than 1,000 points in afternoon trade, the Dow Jones Industrial Average (DJIA) ended at 41,912, down 890 points, or 2.1%.

Worse, Donald Trump appears to be playing with fire when he repeatedly refuses to rule out the possibility of a recession this year – suggesting he is ready to escalate the trade war further. He said his economic policies shouldn’t be swayed by the market sell-off in recent weeks as he has moved to impose tariffs on countries around the world, including China, who has since retaliated with its own tariffs on American products.

The Federal Reserve Bank of Atlanta is now forecasting that U.S. economic output will decline 2.8% in the first quarter of 2025 after nearly three years of growth. Continuing to hoodwink gullible Americans, Trump and his advisers have argued that the end result of his tariff policies will be that prices for U.S.-made goods are lower while foreign-made ones are higher.


However, even before the real impact from the tariffs is here, the loss of a jaw-dropping US$4 trillion in stock market value since the S&P 500 hit its February 19 record high speaks volumes about the financial problems triggered by Trump. People can understand ongoing trade war with China, but the Canada, Mexico, and even Europe part is both astonishing and confusing.

Delta Air Lines on Monday slashed its first-quarter profit estimates by half, sending its shares down 14% in aftermarket. Apple and Nvidia stocks both fell about 5%, while Tesla tumbled 15% – erasing US$125 billion from the company owned by Elon Musk. Essentially, the S&P 500 has given up all gains recorded since Trump’s November 5 election. But here’s why you should be worried.

Commerce Secretary Howard Lutnick said President Trump’s economic policies are “worth it” even if they lead to a recession – an admission that an economic crisis is absolutely possible. He also claimed the markets will learn to adjust to President Trump’s negotiation tactics, denying that there’s any chaos in the way the president has been using tariffs to pressure U.S. trading partners.


As Trump’s roller-coaster tariff policy spooks the global financial markets, from stock markets to crypto currencies, and from job market to US dollar, China retaliated against President Donald Trump’s tariffs with an additional 15% tax on key American farm products, including chicken, pork, soybeans and beef. Knowing Trump, the US-China trade war is just the beginning.

Trump believes, or wanted Americans to believe, that the import taxes can raise money for the Treasury, protect American industries and pressure foreign countries to do what he wants in a range of issues, including immigration and drug trafficking. Economists, however, warn that tariffs raise prices for consumers and make the U.S. economy less efficient as protected American companies have less incentive to innovate.

The trade war, started during Trump’s first-term, saw how Beijing targeted American farm products. U.S. farm sales to China plunged, then recovered after the two countries reached a truce in January 2020 and Beijing promised to buy more from U.S. farmers. American farm exports to China peaked at US$38 billion in 2022, then fell to US$29 billion in 2023 and US$25 billion last year.


When the tariffs hurt Americans more than the Chinese, Trump was forced to spend tens of billions of dollars in taxpayer money to compensate farmers for the lost exports. This round, China is very specific – slapping 15% additional tax on U.S. chicken, wheat, corn, and cotton, and a 10% additional duty on imports of US sorghum, soybeans, pork, beef, aquatic products, fruits, vegetables, and dairy products.

As we are in the early days of Trade War 2.0, the worst is yet to come and the U.S. may get hurt more than China. That’s because since the United States and China imposed tit-for-tat tariffs during Trump’s first term, Beijing has moved to cut its reliance on American farm goods by spurring domestic production and buying more from countries such as Brazil.

Having fought the first round of trade war with Trump, who tried but failed to bring China to its knees, the Middle Kingdom is better prepared now. Boosting consumer demand to ensure China doesn’t need to rely on exports to power its vast economy was one of the strategies. Next – to transform the country into a technological superpower, by ramping up investment and enlisting the private sector.


Make no mistake – Beijing has been making these moves long before Trump won his re-election as it prepares for what could be an economic showdown with the United States. Beijing said – “If the U.S. insists on waging a tariff war, trade war, or any other kind of war, China will fight till the end.” Trump’s inability to kill tech giant Huawei during his first term will see the same failure to kill AI firmDeepSeek in his second term.

While Trump is pushing for isolation to “Make America Great Again”, China is pushing for innovations in AI, robotics, 6G and quantum computing. Chinese Foreign Minister Wang Yi told reporters – “Be it space science or chip making, unjustified external suppression has never stopped. But where there is blockade, there is breakthrough; where there is suppression, there is innovation.”

But China and Canada were not the only countries affected. Other long-time U.S. allies also failed to escape. The E.U. announced retaliatory tariffs early Wednesday on US$28 billion worth of a wide range of U.S. goods imported to Europe such as boats, motorbikes and alcohol. On Thursday (March 13), Trump warned he plans to slap a 200% tariff on alcohol from France and other European nations in retaliation.


Australia, which had been hoping for the same exemption from steel and aluminum tariffs it received during the first Trump administration, said it would not retaliate despite the U.S.’ refusal to grant it exemptions on the 25% tariffs on aluminium and steel imports. Terrified, Australian Prime Minister Anthony Albanese argued that imposing reciprocal tariffs “would only push up prices for Australian consumers.”