In recent weeks, global markets have been through a ride that felt more like political theatre than sound economic strategy.
- Universal baseline tariff: As of April 5, 2025, the US administration imposed a minimum 10% tariff on nearly all imports from all countries.
- “Reciprocal” higher tariffs: Starting April 9, 2025, the US implemented higher, individualized tariffs on imports from specific countries with which the US has significant trade deficits. These rates range from 11% to as high as 50% for some nations.
- Special treatment for China: Tariffs on goods from China have been significantly increased, reaching a combined rate of 125% as of April 10, 2025. Markets responded as expected: nervously, with stock prices dipping and uncertainty spreading.
- Then came the twist. Just four days later, on April 9, Trump stepped back from the brink and suspended most of the higher tariffs for 90 days. While the 10% baseline tariff remains, the steeper “reciprocal” tariffs have been paused for 90 days for most countries (excluding China) to allow for trade negotiations. The markets, almost on cue, snapped back. And the natural question followed: was this entire move ever meant to be real?
- Current situation (as of April 14):
- A baseline tariff of 10% on nearly all imports into the U.S., excluding Canada and Mexico due to prior agreements.
- China: The tariff rate on Chinese imports has escalated dramatically, reaching 145%, effectively halting most trade between the two nations. China has retaliated with tariffs of up to 125% on U.S. goods.
- European Union: Imports from the EU face a 20% tariff, with additional retaliatory tariffs from the EU set to begin on April 15, 2025.
- Other countries such as Vietnam (46%), Taiwan (32%), and Cambodia (49%) face higher rates due to their designation as “major offenders“.
- Automobiles: A 25% tariff on all foreign-made cars took effect on April 3, 2025.
- Steel and Aluminum: Both are subject to a 25% tariff, reinstated earlier this year.
- Temporary Exemptions: Certain consumer electronics, like smartphones and computers, are temporarily exempt from tariffs. However, these exemptions are expected to be reversed soon.
A sinister plan or desperate reaction?
It’s probably futile to try and reverse engineer the actual intention behind the development of recent weeks. Was the tariff move a calculated pressure tactic designed to scare trading partners into making concessions? Or was it a knee-jerk response that backfired once the markets pushed back harder than expected?
Some analysts argue it was all part of a broader game, a strategy to flush out the serious negotiators from the posturing ones. Karoline Leavitt, the White House’s press secretary, mocked reporters for not understanding the president’s plans.
“Many of you in the media clearly missed The Art of the Deal. You clearly failed to see what President Trump is doing here.”
After initially calling for a delay in the reciprocal tariffs, Bill Ackman quickly praised Trump for his ‘genius plan.
Others say the sharp drop in stock prices, the increasing yield on US treasuries, and loud warnings from industry forced a change of heart.
Because originally, according to the thesis, Trump had planned during his term in office to reduce the existing debt burden by issuing low-interest bonds and simultaneously generate additional revenue for the state by levying tariffs on imported goods. However, whether this plan would have achieved the desired results in reality remains questionable. This was mainly because the tariffs would have triggered trade wars, burdening the U.S. economy and reducing expected revenues. In addition, bond interest rates unexpectedly rose during this period of turmoil, which further increased the debt burden. The assumption that both factors could simultaneously reduce the national debt, therefore, proved unrealistic.
Apple: a case study in reality
So, was it a hoax right from the beginning?
Well, some say that it was clear from the outset that the tariffs wouldn’t become effective.
Take Apple, for example. To put it gently, the idea that it could suddenly reroute supply chains or start manufacturing iPhones in Ohio next quarter is optimistic. It takes years to build the kind of production infrastructure Apple relies on, and the skilled labor doesn’t exactly appear overnight, either.
That makes it hard to believe that the original tariff stance was ever fully enforceable in cases like this. You can announce sweeping penalties, sure. But enforcing them without collapsing the very ecosystem your economy depends on? That’s a different matter.
In that sense, maybe the backtrack was always baked in. Or at least, it was heavily anticipated behind closed doors.
But yes, there are counterarguments for this view as well. As for Apple, its difficulty reacting appropriately to the tariffs does not mean that the tariffs would never have happened. Furthermore, it’s not new that certain companies or the products they produce get tariff exemptions. In previous trade disputes, Apple secured exemptions on key Chinese components. That history suggests there’s always been room for pragmatic exceptions in these policies, especially when major players are involved.
Panic, planning, and the real economy
And yet, the panic was real. Amazon reportedly canceled orders that originated from China and Southeast Asian countries. Automakers feared the costs of imported components would throw off entire production models. Even Apple had 600 (!) tonnes of iPhones flown out of India to avoid tariffs.
These weren’t hypothetical scenarios. They were contingency plans triggered by an announcement that many companies took seriously. That alone shows at least that the reciprocal tariffs weren’t perceived as a hoax. The ripple effects were immediate, especially in sectors that can’t just absorb cost shocks or reroute their logistics overnight.
Between optics and impact
And that’s the part that stays with me, not the specific policy, but the whiplash. For companies trying to plan ahead and investors looking for signals, this kind of back-and-forth isn’t just confusing. It erodes trust in the system itself.
My very own takeaway
This episode offers a simple but important reminder.
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