President Donald Trump’s decision to impose sweeping tariffs on imports has sent shockwaves through global markets. Stocks plummeted, the dollar weakened, and investors fled to safe havens like gold and Treasuries as fears of a global recession intensified.

• Tariff Tsunami: Trump’s tariffs, covering nearly all goods entering the US, have ignited a trade war that threatens to cripple the global economy.
• Market Meltdown: The Dow plunged over 1,200 points, the S&P 500 suffered its worst day since the inflation crisis, and the Nasdaq nosedived. Markets across Asia and Europe also experienced sharp declines.
• Dollar Doldrums: The US dollar tumbled to its weakest level in months, defying expectations that tariffs would strengthen the currency. Investors, however, are concerned about the long-term damage to the US economy.
• Flight to Safety: Gold surged to a record high, and Treasury bond yields plummeted as investors sought safe havens.
• Trump’s Triumphant Claim: Despite the market turmoil, Trump declared the tariff operation a success, claiming the US economy would emerge stronger.

Trump’s aggressive trade policies have unleashed a storm of uncertainty in global markets. The full impact of these tariffs remains to be seen, but the initial response suggests a significant economic downturn could be on the horizon.

The Curious Calculation Behind the Tariffs:

Initially, trade experts were puzzled by the methodology used to determine the tariff rates. However, the rather crude formula employed by the White House to calculate these “reciprocal” global tariffs has since been uncovered, as first pointed out by financial writer James Surowiecki on X.

The Trump administration’s formula was surprisingly straightforward:

1. Calculate the Trade Deficit: They took each country’s trade deficit with the US.
2. Divide by Exports: This deficit was then divided by the value of that country’s exports to the US.
3. Halve it for “Kindness”: Finally, this figure was divided by two, presented as an act of “kindness.”