The stock market’s rough start under President Trump’s second term—down 7.27% on the S&P 500 in just 100 days—shows how fast policy changes can shake the global economy.
The main reason: tariffs. The new trade policies, especially the “Liberation Day” and “reciprocal” tariffs, have made investors uncertain about the future. These kinds of policies raise costs for businesses and disrupt trade, which can slow down economic growth and increase inflation. In terms of what we’ve learned, this is like a leftward shift in the short-run aggregate supply curve.
At the same time, investors are moving their money into safer options like gold, which has gone up over 25% this year. The U.S. dollar has dropped more than 8%, and international markets like Germany and Hong Kong are seeing more investment. This shows how quickly money can move across borders when confidence in the U.S. drops.
Overall, this situation connects directly to what we’ve been studying: how trade policy affects growth, how investor expectations matter, and how economic shocks in one country can spread around the world. It is a real example of the international business cycle in action.
I found this blog post to be an insightful take on the immediate economic effects of U.S. tariffs under President Trump’s second term. It really highlights how quickly policy changes, like tariffs, can shake things up—not just in the U.S. stock market, but globally. It is a reminder that when one country makes drastic policy moves, it does not just affect its own economy—it sends shockwaves everywhere. It will be interesting to see the long-term impact of these tariffs on specific industries—and how might they be affected in the years to come.
ReplyDeleteVery full of information it really talks about how quickly all things that were put into office took an effect and how quickly its changed our relationship with people outside of the U.S and the ripple effect of that like countries pushing business owners to stop purchasing U.S Bonds.
ReplyDeleteIt’s crazy how quickly tariffs and policy shifts can mess with the markets and investor confidence. The drop in the S&P, rise in gold, and weaker dollar totally show how sensitive the global economy is to U.S. decisions, definitely feels like a textbook example of a supply shock and capital flight.
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