It wasn’t a war plan. It wasn’t a battle plan. It was simply a broadside unloaded on the source of American prosperity, the trading partners who buy our stuff and fund our deficits. If anyone still thought President Donald Trump was bluffing when he said he’d slap tariffs on all of America’s imports, the cards are now on the table, and none of them are jokers. In a presentation at the windswept White House Rose Garden, Trump announced 10% tariffs on all U.S. imports, and double-digit tariffs for some 60 countries and territories.
The news sent stock markets tumbling, and had economists issuing prepared notes warning that the tariffs would crush domestic consumption as well as U.S. trade, and were likely to plunge the U.S. into a recession by the end of 2025.
Chinese goods will face a new 34% tariff, on top of the 20% tariff Trump already imposed. Imports from the European Union will face 20% duties, Japan will face a 24% tax, and Indian exports will pay a 26% tax. Vietnamese goods face a 46% tariff. Canada and Mexico largely escaped new tariffs, but it wasn’t clear if a 25% levy on foreign-made cars would apply to the two U.S. neighbors.
China’s Commerce Ministry called the tariffs “a typical act of unilateral bullying” and vowed a stiff response.
Trump was clear that the tariffs were the start of a new era of trade protectionism.
“For decades, our country has been looted, pillaged, raped, and plundered by nations near and far, both friend and foe alike,” Trump said. “But it is not going to happen anymore.”
No new tariffs were announced for Canada, leaving just Trump’s existing 25% tax on all goods that aren’t part of the existing U.S., Canada, and Mexico free trade agreement, a 25% tax on steel and aluminum, and a 10% tax on energy. It wasn’t clear if Trump’s new 25% tariff on automobiles would apply to Canada and Mexico. Prime Minister Mark Carney said Canada will soon retaliate “with purpose and with force.”
Economists say the tariffs are likely to push the U.S. into a recession.
“We’re gonna have to go through a little tough love maybe,” Trump said in bare acknowledgment of the pain the tariffs will likely inflict on consumers.
Before Trump’s announcement, the European Union was standing firm: European Commission President Ursula von der Leyen told the European Parliament on Tuesday that the EU was prepared to hit service exports, including financial services and big tech. Europe would negotiate “from a position of strength,” von der Leyen said. “Europe holds a lot of cards, from trade to technology to the size of our market. But this strength is also built on our readiness to take firm countermeasures. All instruments are on the table.”
“Rather than fixing the rules that many U.S. trading partners admittedly took advantage of to their own benefit, Trump has chosen to blow up the system governing international trade,” Eswar Prasad, a professor of trade policy at Cornell University, told The New York Times.
The first signs of rebellion emerged in the Senate, where Democrats were joined by four GOP senators, Rand Paul, Lisa Murkowski, Susan Collins and former majority leader Mitch McConnell to pass a bill voiding Trump’s use of emergency powers to place tariffs on Canada. “Tariffs are a terrible mistake,” Sen. Paul said ahead of the vote. “They don’t work. They will lead to higher prices.” The bill may die in the House or, as many suspect, Trump may just lift tariffs piecemeal, by whim.
It’s that uncertainty that is bolstering fears of a recession.
None of this comes as a surprise to the brains at the world’s most successful investment bank, Goldman Sachs. In a research note distributed this week, Goldman said the prospect of a trade war fueled by Trump’s tariffs has nearly doubled the chance of a U.S. recession to 35%, from its previous 20% probability. The bank also said it expects inflation to rise to 3.5%, GDP growth to drop to 1%, and unemployment to hit 4.5%, while interests rates could drop to 3.5%–3.75%. Just a week after Trump’s election, Goldman forecast GDP to grow by 2.7% in 2025.
JPMorganChase says the tariffs amount to a $400 billion tax increase, the largest since 1968, when Lyndon Johnson was president. Prices will rise by 1% to 1.5% this year, the bank said, adding that “the resulting hit to purchasing power could take real disposable personal income growth in the second and third quarters into negative territory.”
EY chief economist Gregory Daco says the tariffs will create stagflation—when the economy shrinks or stays stuck, but prices rise—dragging GDP growth down by a massive 1 percentage point in 2025, and a further 0.4% in 2026, while pushing inflation up by a percentage point. That may sound a bit abstract, but as Daco noted: “For the median household, this would represent an annual income loss of $690 while for families in the bottom quintile the loss would surpass $1,000.”
One company that will get slammed by Trump’s tariffs is Harley Davidson. The iconic U.S. motorbike maker would see the cost of its basic Road Glide touring model nearly quintuple in some European countries. Already, the $28,000 bike costs $77,000 in Denmark, when the country’s 25% value-added tax and 150% luxury tax are added. Tariffs imposed by the EU would bring the price of the road glide to $124,000, The Wall Street Journal reported. To preserve its home market, Harley wants hefty tariffs on imported motorcycles.
One of the oddest tariff targets was the Heard and McDonald Islands, remote volcanic islands that belong to Australia and are home to macaroni penguins, Antarctic fur seals and the endangered black-browed albatross—but no humans.
So how did Trump come up with the tariff numbers? Financial writer James Surowiecki figured it out: The White House took the trade deficit that America runs with a nation and divided it by the value of the exports that country sent into the United States. Then, because Trump said he was being “kind,” that number was cut in half.
Ultimately, it’s hard to know how seriously to take the Trump tariffs. Are they just for show, and will genuflection bring them to an end?
The Usual Suspects
- The Amazon lion roars: More than two years after buying the venerable Metro Goldwyn Mayer, along with its huge library of hits, Amazon has finally figured out what to do with the studio. And it’s not good news for Prime members. Amazon says MGM will now produce 14 feature films a year, and each will debut in cinemas around the country for at least 45 days before becoming available on pay-per-view and then eventually bundled into your Prime subscription. That’s no fun for us rubes now paying $180 a year for Prime. Still, the news could be good for cinemas. Attendance at theaters is down 35%, the CEO of AMC told the New York Times, blaming some of the drop on a decline in new theatrical releases, which he thinks Amazon could help fix.
- J&J takes a powder: A federal bankruptcy court in Houston slapped down an effort by pharma giant Johnson & Johnson to use a quirk in bankruptcy law to settle some 90,000 complaints that its baby powder caused cancer. J&J denies there’s any link between the white stuff and disease but offered to put $8.9 billion into a shell company that would pay out the claims over 25 years. That would shield the parent company from any future claims, a move known as the Texas two-step.
- The TikTok clock ticks on: As TikTok approaches the April 5 deadline for its Chinese owners to sell 80% of the firm or face a U.S. ban, investors have been stepping up. Ubiquitous Silicon Valley fund Andreessen Horowitz is in talks to invest, as are Oracle and private equity giant Blackstone, which said it may take a small stake in the shares offered for sale by TikTok parent ByteDance, Reuters reported. Founders of all three firms have been strong supporters of Trump. No price has been set on TikTok, the FT reported, but U.S. sales were about $12 billion last year.
- Turbulence: Major airline stocks, including Delta, American and JetBlue, have dropped nearly 25% in the last month, as uncertainty over tariffs and border policies has cut business travel. DOGE cuts, too, mean federal government air travel, which accounts for about 2% of revenue for many airlines, is down by half. Already, airlines are using smaller planes and even canceling some flights. And consumers spooked by Trump’s economic policies and a tumbling stock market have also cut back on flying. But if you’re not scared by Trump’s cuts to the FAA and airline safety, there’s at least one ray of sunshine poking through these clouds: by summer, ticket prices may drop dramatically.
- Who’s bankrolling Softbank? After promising this week to invest $40 billion in ChatGPT maker Open AI, Japan’s Softbank investment group has been raising eyebrows over its extensive investment plans in artificial intelligence. Back in January, Softbank pledged to invest $100 billion in the Stargate Computing Initiative. Now, as The Wall Street Journal reports, much of that funding is coming from—no surprise here—Softbank’s primary lender, Mizuho Financial Group. That’s left investors slightly nervous. Softbank is probably best known for its failed bets on WeWork and Uber.
- Lipstick on a… Yahoo! owner Apollo Global Management has hired a new marketing chief to reawaken the web company’s “almost latent brand love.” But that won’t be easy. Yahoo! gets about 3 billion web hits a month, compared with Google’s 73.6 billion visits.
- Snow White and the 7 DEI hires: Last week it was the dwarves who were upset about Disney’s decision to use CGI characters instead of hiring real little people for its Snow White remake. This week it’s Trump-appointed FCC chief Brendan Carr who is threatening Disney’s ABC broadcast licenses over trying to include little people, as well as people of color, disabled people, and even female people and non-cisgendered people, in its movies. In a Trump-inspired trashing of the entertainment giant, whose stock is down about 20% in the past year, Carr wrote to Disney chief Bob Iger: “For decades, Disney focused on churning out box office and programming successes. But then something changed,” he said adding: “Numerous reports indicate that Disney’s leadership went all in on invidious forms of DEI discrimination a few years ago and apparently did so in a manner that infected many aspects of your company’s decisions.”
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Trumplandia
- With friends like these: Sometimes it doesn’t help to be a buddy of the president. Harry Sargeant III learned that when he got a letter from the Treasury Department ordering him to wrap up his Venezuela-based oil trading business, Global Oil, by the end of May. Sargeant has spent years trying to ease tensions between the U.S. and Venezuela, playing golf with Trump at Mar-a-Lago and visiting with Venezuela’s strongman, Nicolas Maduro. The ban on Sargeant’s company is part of a broader White House effort to ramp up pressure on Maduro, who angered Trump by refusing to take in Venezuelan deportees.
- Another week, another coin: First progeny Eric and Donald Jr. say they’re entering the Bitcoin mining business. American Data Centers, a firm founded in February by a small investment firm called Dominari, and which counts the brothers as advisers and shareholders, will merge with a Bitcoin mining firm called American Bitcoin that’s majority-owned by crypto infrastructure firm Hut 8. American Data Centers, which so far hasn’t built any data centers, will get a 20% stake in the new venture. It’s not clear whether the Trump brothers have actually invested any currency—crypto or cash—into either venture.
- Friends in high places: After Trump appointed a lawyer who represented Apple $AAPL to the National Labor Relations Board, the agency froze two cases against Apple that alleged the iPhone maker blocked employee efforts to unionize. Crystal Carey, a partner at Morgan Lewis & Bockius, was nominated to be the NLRB’s general counsel.
- The latest meme stock? Shares in money-losing right-wing TV channel Newsmax have jumped more than 2,200% since its IPO on the New York Stock Exchange Monday. Newsmax lost $72 million on revenue of $171 million last year.
- Cheap energy? That laughter you hear echoing through the halls of some of the U.S.’s biggest electrical utilities is their delayed reaction to Donald Trump’s campaign promise to lower electricity rates. This week, Dominion Energy, with 3.6 million customers in Virginia and the Carolinas, said it will raise prices 14%, as labor, materials and grid upgrades hammer its profits. In February, New York’s Con Edison asked for an 11.4% increase in electric tariffs. That other sound you hear? The silence of the air conditioners consumers are going to be turning off this summer to save money.
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Elon’s World
- X x xAI: Things can get confusing in the world of Xes. Last Friday, Musk announced that his artificial intelligence startup xAI had acquired his social media platform X. With only one set of advisors working for both companies, Musk said on X that he’d valued the social media platform at $33 billion, an $11 billion drop from what he paid for it three years ago, and $24 billion more than it was valued at just a couple of months ago. Musk more than made up for that by setting a valuation of $80 billion on xAI, which was valued at $50 billion in its last funding round in November. (It was valued at $24 billion when it raised $6 billion earlier last year.) Both companies are controlled by Musk, who seems to be playing by his own rules, and neither is publicly traded. Still, it’s not clear what other investors in the companies think of the deal, or what it actually means. “It’s funny money,” Andrew Verstein, a law professor at UCLA told The Wall Street Journal. “It’s like using Monopoly money to buy Pokémon cards.”
- Elon v. Apple? The world’s richest man is facing off against the world’s most valuable company over satellite access on the iPhone. To allow iPhone users satellite access where cell phone towers don’t reach—a move that would, presumably, boost sales—Apple has been working with satellite operator Globalstar, while Musk has been working with phone carrier T-Mobile to offer a similar service. Now Musk wants federal regulators to block Apple’s satellite program where the two compete for limited bandwidth. Billions of dollars are at stake in an industry where every player is dependent on another. Globalstar uses SpaceX to launch its satellites, but SpaceX and T-Mobile need Apple to make their satellite service easy to use on the iPhone. And Musk’s social media platform X relies on the Apple Store to make it available on iPhones, and to collect advertising revenue.
The Short Stack
- Big law chickens out: The latest large law firms to bend to Trump’s crusade against the people who pursued him in courts and Congress are Milbank and Wilkie Farr, both of which agreed to halt DEI hiring and provide $100 million in pro bono legal services to nonprofits and individuals, including veterans. Three firms targeted by Trump have sued and won temporary restraining orders: Perkins Coie, Jenner & Block, and WilmerHale. Milbank said it was approached by the Trump administration and realized that its income depends on getting its clients a fair hearing from the government. “The firm is dependent on [its] ability to navigate client issues in all parts of the executive branch,” said firm chair Scott Edelman. The agreements don’t seem to block the firms from repping veterans who might want the Trump administration to roll back its cuts to the VA. Then again, with top billing rates near $3,000 an hour, that $100 million won’t last long.
- Apple’s card deal: As Apple’s credit card nears a sale by Goldman Sachs, Visa and American Express are battling to dethrone Mastercard $MA as the Apple Card’s payment network. Payment networks collect a fee for each transaction, but what makes the Apple Card particularly covetable is that more consumers are using their Apple Wallets, where the Apple Card is the default payment method, to pay for purchases. For now, it looks like Visa’s got the edge, with an offer of $100 million, The Wall Street Journal reports.
- Zuck plays his Trump card: What’s behind Mark Zuckerberg’s enthusiastic embrace of Trump? One obvious theory: Zuck’s team has been pressing Trump to up the pressure on European regulators to drop plans for a forthcoming antitrust decision expected to go against Meta. That decision would allow European Facebook and Instagram users to opt out of seeing personalized ads. But that targeted advertising is where Meta makes its money.
Peter S. Green is a veteran reporter and editor who has spent more than two decades covering business and finance from Eastern Europe to New York City, and has worked for Bloomberg News, The New York Post, The New York Times and The Messenger. He lives in New York City and is always looking for the next big story.
