By Daily Mail (U.S.) | Created at 2025-04-03 21:37:24 | Updated at 2025-04-04 17:31:35
21 hours ago
Lights are flashing red on Wall Street after President Trump fired the first big shot in his global trade war during a Rose Garden address at the White House Wednesday evening.
All imports to the US were slapped with 10 percent tariffs, effective April 5.
All foreign-made cars and auto parts were hit with 25 percent tariffs, effective now.
Select trading partners – including the European Union, Japan and, most critically, China – were targeted by 'reciprocal' rates designed to punish them for the duties that they levy on US products.
On Thursday, markets plummeted. Crude oil prices are down. The dollar has weakened. Wild fears over recession are up. And I'm not bothered.
As I've written in the Daily Mail before, I don't make investment decisions based on short-term market volatility and my confidence in the strength of the US economy is relatively unchanged.
Tariffs have been around for 100 years, and they'll be here for 100 more.
Here's how I am thinking about Trump's trade war:
Select trading partners – including the European Union, Japan and, most critically, China – were targeted by 'reciprocal' rates designed to punish them for the duties that they levy on US products. (Pictured: Trump in the Rose Garden).
Markets plummeted. Crude oil prices are down. The dollar has weakened. Wild fears over recession are up. And I'm not bothered.
Free Market Myth
Let's get one thing straight: there's no such thing as 'free trade' – a utopian policy by which governments allow the unimpeded flow of goods and services over their borders without interference.
Nearly every country on Earth uses tariffs or duties or quotas to prop up their national industries to make them more competitive against foreign goods.
Some just do it more than others.
What Trump has done is said, 'Okay. You're charging us a tariff for goods or services. We're charging you a similar amount.'
Kevin O'Leary says he never makes investment decisions based on short-term market volatility
Now, all of a sudden, every armchair market analyst is a historian, citing The Tariff Act of 1930, commonly known as the Smoot–Hawley Act, which restored US tariffs on trading partners that had been dropped throughout the 1920s.
Most remember Smoot–Hawley from high school social studies as the bill that plunged the country into the Great Depression. And nervous investors and even some Republicans are quick to claim that Trump's policy is a case of America's dark history repeating itself.
I disagree. What the president is doing has never been done before. Gone are the days of the United States negotiating trade deals one-by-one, allowing trading partners to extract piecemeal concessions.
Trump has essentially declared one giant global renegotiation – and I anticipate that every trade delegation from every country will soon be lining up in Washington for talks. For no leader wants their country to be the hold-out barred from the world's largest economy.
Ironically, Trump's trade war may be the only real path to zero tariffs for all… that's free trade.
Short-term pain
The markets are spooked, but not because of any material impact from the tariffs, which will not be felt for months, if at all, for Trump's 'reciprocal tariffs' are designed to be short-term measures only.
Indeed, the Smoot-Hawley historians would do well to remember the 1994 North American Free Trade Agreement and 2020 United States–Mexico–Canada Agreement, which basically negotiated zero trade barriers through reciprocal tariffs.
Trump is clearly seeking mutual tariff disarmament – the administration is very clear about that.
'My advice to every country right now is: Do not retaliate. Sit back, take it in, let's see how it goes. Because if you retaliate, there will be escalation. If you don't retaliate, this is the high-water mark,' Treasury Secretary Scott Bessent said Wednesday evening.
World leaders would be wise to listen and I believe they will. That's why I continue to believe that the vast majority of the Trump tariffs will not be a significant drag on GDP growth or cause higher inflation.
The real 'long-term' trade war to watch is with China.
The markets are not down because of any material impact from the tariffs, which will not be felt for months, if at all, because Trump 'reciprocal tariffs' are designed to be short-term measures.
Real trade war
China's Commerce Ministry responded to Trump's tariff announcement in a statement, writing, 'The so-called "reciprocal tariffs" based on the U.S.'s own subjective and unilateral assessments violate international trade rules, severely harm the legitimate rights and interests of other parties, and represent a typical act of unilateral bullying.'
That's laughable!
Make no mistake, the People's Republic of China is at economic war with America, competing for top-dog status as the world's largest economy.
Since joining the World Trade Organization – the international body tasked with regulating global commerce – in 2001, the Chinese government has been violating WTO rules.
The Communist regime steals the intellectual property of foreign businesses, refuses to abide by financial services compliance laws and manipulates its currency to benefit its domestic industries. And China will undoubtedly continue to do so until someone stops them.
Trump is now using a combined 54 percent tariff to force China to follow global norms.
These measures are extreme.
And necessary.
