The United States created 228 thousand net jobs in March. Recession? Where? The economy added a monthly average of 158 thousand net jobs the last year of thriving expansion. In the first quarter they were 152 thousand. There is no doubt that Hurricane Trump devastated consumers, entrepreneurs and investors. And the activity and expense were remarkable. But the Data Dura denies a contraction of the real economy. No, until March the recession did not happen.
April, it is known, it is another story. It is also an appointment with history. The 2 was the day of liberation. The President Donald Trump deployed the new tables of the law, a succession of banners with great increases in duty For 185 countries and/or Internet domains. Invoking the authority that gives the previous declaration of an economic emergency caused by the size and persistence of the commercial deficit (and little more), the liberator ordered the largest tax rise in the last half century in the US. In principle, to stay that way, it is a collection jump that exceeds half a billion dollars a year. A fulminant ballast for the pocket of consumers and companies in the country. But the day of liberation is not the end of the road, but the beginning of a more complex dynamic of retaliation and negotiations. The only certainty, it could be said, is that this patriotic photo will not remain that way. However, the costs are not exhausted in the tax itself. There will be abundant additional damage to production chains, the value of assets and trust. Recession? Where? Over there. Starting with the “imposite” and everything throughout the vicissitudes that open in the liberation saga. Now, it will be a miracle dodge it.
Trump warned that he would announce a regime of reciprocal tariffs, but lit a different creature. It is a structure of two sections. The first is the application of a 10% universal tariff to all countries and territories (which began to rule on Saturday). A country tax would be said, just for existing and accessing. The second section is the individualized “reciprocal” tax on imports from countries that have the highest bilateral commercial surpluses. It is the result of the exchange, and not the aliquot of its tariff, which sensitizes this second step, which will enter into force on Wednesday 9 (although customs lack sufficient capacity to verify the rules of origin). The sum of both sections is the final ticket awarded to each country. The European Union, 20%. Japan, 24%. South Korea, 25%. India, 26%. Thailand, 36%. Vietnam, 46%. China, 34%. Considering the extra 20% that Trump applied with the argument of the emergency for the fentanyl, the total rate for China will be 54%. Only the exports of Canada and Mexico were saved under the umbrella of the Free Trade Agreement, the USMCA.
The president fulfills his electoral promise. He is the man of tariffs and protectionism. Understand the relative magnitude of change. The US before Trump’s first presidency applied an average tax of 1%. And started 2025 in 3%. Now he encloses behind this very high wall. The premise is that accessing your market is a privilege and not a right. And that’s why the entrance charges. More expensive the more competitive the country is.
The forge just begins. Small countries that are large exporters will respond by eliminating their own tariffs in search of reciprocity. Israel did not wait and did it before Trump’s message. The same was late. The bureaucracy used the old data. And Tel Aviv received a 17%tariff. Will advocate at least 10%floor. However, management is discretionary and no one guarantees it. Washington uses figures that contemplate not only formal tariffs but other muddy concepts such as non -tariff barriers and the manipulation of currency that can bury any allegation.
Countries with large internal markets will retaliate. China already did with a 34% increase in tariffs and the prohibition of exporting some rare earths, bristling a Trump obsession. His measures will be triggered on Thursday, a day after Washington. It is a narrow window for negotiation. Europe will follow the steps, but first you will want to join in a common position. Movement, even if conversations open, a spiral of retaliation – action and reaction – is expected. And that dynamic is a crusher of commerce, income and activity. Unlike 2018, this time there was no conato of competitive devaluations. The trade war did not move to the coins. But this is not an absolute blessing. If the dollar depreciates the imposite invoice in the US will increase.
Liberation proceeded Wednesday 2nd, the next day, the bears sent their first notification. The Russell 2000 fell into the trap of a Bear market. Friday was the turn of Nasdaq (100 and the combined). The S&P 500, was built 17.4% since its February 19 record. A slide like any of those suffered this week will cross the Rubicón. And thus confirm the validity in Wall Street of a Bear market with all the letters. Thursday and Friday lead falls indicate that Trump’s dimension exceeded the worst expectations. The bag anticipates, but it is not infallible. Its mistake was not to have planned the greatest economic policy error of all time, according to Ricardo Hausmannfrom mit. Or, without the intention of exaggeration, “of the last 95 years”, according to Jeremy Siegelof Wharton. The skate of Thursday and Friday pulverized 5.4 billion dollars on Wall Street. From the presidential assumption, they add 11 billion. The wealth effect increases the chances of the recession.
And now who can help us? In a good mood, Thursday, Trump posted: “The patient survived.” On Friday, just in case, he remembered Jay Powell and the Fed. “This is the perfect time to cut interest rates,” he said. “Energy prices fell, rates (long), inflation (?), Until the price of eggs, 69%, and jobs rose, all in two months … Tranged the rates, Jerome, and stop doing politics.” Powell, of course, has another idea. The biggest tariffs will raise inflation. Expectations already climbed in advance. And high inflation could be persistent. The Fed prepared for this stage, although it was Trump who produced it. And it is he, going back, who can mitigate him. In any case, the fear for the future of events is his and not from the Central Bank, which will continue in seeing and waiting. The dread, however, bullet in the markets. They see Powell cutting the rate in June. But for that there is still an eternity. And if the inflation is not served either.
Source: Ambito
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