Liberation Day tariffs chaos could cause permanent damage to US economy, amid global tensions

Stock market turmoil, fears of recession, drive Trump to grant 90-day pause on reciprocal tariffs for most nations, but hits China harder

BY Kumar de Silva

The US stock market has been falling ever since Trump’s inauguration in January 2025, but it reached recession levels the week following “Liberation Day”, April 2, when Trump announced Draconian tariffs on 185 nations, including its closest allies, Canada and the European Union. The US stock market lost 20%, or over $6 trillion, of its value, by the following weekend, taking the US economy perilously close to recession levels.

While the market was crashing over the weekend, the White House issued the following statement on Saturday evening:
“The President won his second-round matchup of the Senior Club Championship today (Saturday) in Jupiter, Florida, and advances to the Championship Round tomorrow”.

Trump spoke to the press on Air Force One on his return flight from Florida, where he had participated in, and won the aforementioned seniors’ golf tournament. Which of course explained the reasons behind the collapse of the stock markets after the announcement of increased tariffs, and allayed the fears of the nation of a possible economic recession.

He ranted, while downplaying a weekend of pummeling losses, “What’s going to happen to the market? I can’t tell you, but I can tell you, our country has gotten a lot stronger, and eventually it will be a country like no other”. He’s wrong on both counts. The US has got a lot weaker, both economically and internationally, in the past two months. And eventually, it will become a kleptocracy exactly like Russia, which has been his ambition all along.

He continued, “I don’t want anything to go down”. (Oops, too late). “But sometimes you have to take medicine to fix something”. I know the perfect medicine that will fix everything, but Trump won’t take it.

There was a slight upturn in the markets last Monday, April 7, when reports on social media from Kevin Hassett, a top White House economic adviser, indicated that “the President was considering a 90-day pause on tariffs”, a potential reprieve before Trump’s Draconian tariffs took effect on April 9. The White House immediately shot this rumor down, calling the report “fake news”. The markets continued on their downturn.

This confusion about tariffs came against a backdrop of massive crowds at every major city in the 50 states, Republicans, Democrats and Independents, gathering to protest against Trump’s actions during his second term. Actions which included not just his ill-thought-of tariff policies, but his inability to address inflation and rising prices, his illegal deportations, his defiance of the judiciary, his desire to exact retribution from his political and legal enemies, amongst other attempts to harness dictatorial power.

The White House has been sending mixed messages about how much pain Trump is prepared to ask his citizens to endure, the majority who voted for him to reduce the pain they were already suffering, not to endure more pain.

Last Sunday, Trump gloated that over 70 nations had already made overtures to negotiate tariff terms with the US, that many are “kissing my ass” to make a deal; that Japan and South Korea had already sent delegations to the White House to negotiate terms; that one country had already agreed to his tariffs, the only problem being that he had never heard of Zimbabwe. He said he was open to make any reasonable deal.

Then he immediately contradicted himself, stating that there was no room for negotiation, that his announced tariffs on Liberation Day were irreversible. He warned all the nations who had increased tariffs forced on them not to take retaliatory action. Or else.

He also probably lied, as only he can, that despite the hostility abroad about his Liberation Day tariffs, “they are being very nice, because they like me”. Completely contrary to the furious statements made recently by the leaders of the nation’s closest allies, Prime Minister Mark Carney of Canada and the head of the European Union, Ursula von der Leyen. Carney has vowed to “retaliate to tariffs issued by Donald Trump soon, with purpose and with force”. Von der Leyen described the “US President’s universal tariffs as a major blow to the world economy, and the European Union was prepared to respond with countermeasures”. Nice, polite words, but the innate hatred was clear.

Then at precisely 1.18 p.m. on Thursday, April 9, Trump saved the nation from a decision he himself had made, just a week ago, on his much-vaunted Liberation Day. He granted a 90-day pause on the increased tariffs announced a week earlier to all nations which had not taken any retaliatory measures.

The reprieve did not include the tariffs imposed on China. Those imposed on the European Union are also likely to remain unchanged, as Brussels had already made a retaliatory statement.

Thanks to the greatest President in history, the markets are rebounding, the chaos caused by the week of tariff flip-flops has been corrected.

Trump is already claiming his shameless backdown, forced upon him by the specters of recession and as he put it, “yippy yappy” markets, which must mean sinking markets entirely caused by the Biden administration, as a major triumph.

Satirist Jon Stewart compared Trump’s erratic performance on tariffs to a dog vomiting on your bed, and a few days later, returning to eat that vomit. Then beaming proudly at you, with a triumphant bark, as if to say, “Isn’t that a wonderful thing I just did, cleaning up the mess I made? Am I not the best dog in the world?”

China has threatened to retaliate with a further 34% tariff on US imports to China, making total of 84% in tariffs. Trump immediately responded with a further 50% tariff on China’s imports, which will take the tariffs on all goods imported from China up to 125%. If this trend persists, professional analysts at JP Morgan have estimated a 60% likelihood of a recession, while Goldman Sachs had the odds at 40 – 50%, within the next 12 months.

A slump in the stock market index doesn’t inevitably induce a recession. In any event, that slump has been averted by Trump’s 90-day reprieve. However, there is every possibility that US markets will reach recession levels if a major trade war develops between the two largest economies in the world, the US and China, which is becoming more than likely by the day.

China calls Trump’s new tariffs “a mistake upon a mistake”. Beijing vowed to hold the line, stating “the threat once again exposes the blackmailing nature of the US. China will never accept it. If the US insists on its own way, China will fight to the end”.

In a trade war between the United States, led by an impulsive, ignorant President who is too stubborn to heed the advice of all but his most sycophantic economists, and China, which always plays the long game and is well prepared to weather a trade war and come out stronger, my money is on China.

As the spokesman for the ruling Chinese Communist Party said: “US tariffs will have an impact on China, but the sky won’t fall. Since the US initiated the first trade war in 2017 – no matter how the US fights or presses – we have continued to develop and progress, demonstrating resilience. The more pressure we get, the stronger we become”.

Unfortunately, it is likely that such a trade war between these two economic giants will leave the whole world poorer, almost certainly facing a global recession. It is now left to Trump’s senior advisers to clarify what Trump means with his agonizingly contradictory and confused explanations in a futile attempt to justify a failing economy. Alas, such a possible solution has hit a road block.

Peter Navarro, Trump’s chief economic adviser and the co-architect of Trump’s tariff policies, does not plan on any change on tariffs already imposed. On the other hand, Trump’s co-president and chief financier, Elon Musk states that Trump’s tariff policies are a disaster. In fact, he advocates the total opposite – free trade, no tariffs, starting with the closest allies, Canada and the European Union, ultimately ending with global free trade.

Navarro insults Musk, calling the richest man in the world a used-car dealer. Musk says that Navarro is a moron, dumber than a sack of bricks; later apologizes, saying he was insulting sacks of bricks in this comparison.

The reaction to this hostility between Musk and Navarro, two of the major policy makers in the Trump administration, of White House Press Secretary, Karoline Leavitt: “Boys will be boys”.

In other words, let the 53-year-old co-President boy, Elon Musk, and the 75-year-old White House Chief Economic Adviser lad, insult each other and have their fun, insulting and defending tariff policies which may drag the nation to recession. A perfect example of administrative cohesion.

Musk’s brother, Kimbal Musk, who is on the Board of Tesla, tweeted a scathing criticism of Trump’s tariff policies, stating they will surely lead to a global recession.

The day of the long-awaited and inevitable duel between the world’s most powerful man and the richest man in the world, the clash of two Titanic egos, may well have finally arrived.

Trump needs Musk’s money to destroy the political career of any Republican member of Congress who dares to question his authority – and stupidity. He also needs Musk to help him win an unconstitutional third term, and stay out of jail.

Musk needs Trump’s power to maintain the unconstitutionally established Department of Government Efficiency (DOGE), which will enable him to privatize major federal programs like Medicare, Social Security and Education, in addition to ensuring that all federal contracts of the military industrial complex, with an $850 billion budget, will be awarded to himself and his billionaire buddies.

Round One looks as if Elon Musk is leading on points, when Trump backed down last Thursday from his pet tariff policies, which Musk has already described as a disaster. He will win it conclusively if Trump changes his mind about increased tariffs on China, where Musk has enormous investments.

The plot certainly thickens.

In any event, the nation – and the world – is in for a spectacular treat, on June 14, 2025. A military parade is being planned in Washington DC, unparalleled in its magnificent splendor, estimated to cost over $90 million, to celebrate the 79^th birthday of Donald Trump, the 47^th and greatest President of the United States of America.