Trump said on August 1st he would increase tariffs by 10% to 70%, and the market reaction was quite real. U.S. stock futures plummeted, with Dow futures down 3% and Nasdaq futures down 1%. The dollar was sold off, while the yuan and euro appreciated. U.S. Treasury yields soared to 8%.
Trump's tariff policy is quite interesting. He stated that starting July 4th, he would send notification letters to various countries, setting tariff rates ranging from 10% to 70%. The timing is quite clever; July 4th is Independence Day in the U.S., when everyone is celebrating, and he chose this day to send the letters.
Moreover, the maximum tariff rate of 70% has been raised from the 50% limit mentioned in April.
The World Bank also predicts that global trade volume will shrink by 12%-15%. Goldman Sachs says global inflation will rise by 8 percentage points. These numbers are frightening to look at.
By the way, has Trump opened a short position again? I'm really impressed.