Dow opens 1,200 points lower, S&P 500 and Nasdaq plunge as Trump tariffs roil markets; Apple, Nvidia and Nike slump; dollar and gold dive. U.S. stocks are plunging a day after U.S. President Trump outlined new tariffs aimed at reordering global trade. MarketWatch
This above graph best portrays what is both sad and terrifying about the result of President Trump’s “liberation day” tariff announcements. The Atlanta Federal Reserve’s GDPNow estimate of first quarter economic growth shows an economy being driven over a cliff.
The MarketWatch headline of the DOW’s 1200 point drop announcing the reaction of US financial markets the next day was just as terrifying.
Trump is so steeped in his delusions of grandeur that he believes bringing back President William McKinley’s tariff policies that were instituted just before the turn of the last century (1890) will make America great again.
But in fact, McKinley’s policies created the Robber Barons and monopolies that led to so much corruption and concentration of power that it ultimately caused the Great Depression and ultimately World War II.
It is a sad time because it confirms one political party is ignorant of not just economic facts but is willfully ignorant of the damage higher tariffs will do to other economies, not just ours.
The US economy was the “envy of the world”, said The Economist when President Biden handed off of the fastest growing economy in the developed world to the Trump administration that had brought the US out of the COVID-19 pandemic.
McKinley era economists were largely ignorant of the economic knowledge learned since then. But Trump and his Republicans’ ignorance of basic economic facts today isn’t excusable. Tariffs are a tax levied on imports, which raises the price of those imports.
There is another effect of increased tariffs that will add to the pain. The trade barriers it sets up will reduce the flow of foreign trade that will create supply shortages as happened during the COVID-19 pandemic. This was the root cause of the inflation surge in 2021 that induced the Federal Reserve to raise interest rates and borrowing costs for consumers, hurting lower-income folks the most.
Last Wednesday President Trump had already announced 10% universal tariffs on all imports to the U.S., which totaled more than $4 trillion last year, according to the Bureau of Economic Analysis, or almost 14% of total economic output.
“He announced more on Chinese goods, adding to the double-digit levies already in affect, plus additional ones for countries that he deems to have excessive barriers to imports from the U.S.,” said MarketWatch.
We will soon have concrete evidence of the inevitable result—actual stagflation. It will firstly appear in higher prices, the (-flation) result that will cause consumers to buy less. This in turn will begin to slow economic growth, the (stag-) component of stagflation.
We shouldn’t forget what happened during William McKinley’s era. It was the first Gilded Age that created the Robber Barons of that day, just as the Oligarchs seated in rows behind Trump during his inauguration, will benefit the most from Trump’s ‘liberation day”.
Harlan Green © 2025
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