Trump’s Tariff Bombshell Triggers Long-Feared Global Economic Quake

Markets brace for aftershocks as protectionist policies slam supply chains.

### The Domino Effect Nobody Wanted

Two years after implementation, the tariffs finally hit critical mass—sending shockwaves through manufacturing hubs and currency markets alike. CEOs now scrambling for Band-Aid solutions look suspiciously like they’re replaying the 2018 trade war playbook. Spoiler: it didn’t work then either.

### Crypto’s Unlikely Safe Haven Surge

While traditional markets reel, decentralized finance protocols see record inflows. Bitcoin’s 27% monthly spike smells like institutional panic—gold 2.0 with better PR. ‘Economic sovereignty’ suddenly doesn’t sound so cringe when your national currency’s getting tariff-whipped.

### The Cynic’s Bottom Line

Wall Street’s ‘risk management’ departments are now just glorified Trump policy prediction markets. Place your bets—the house always wins (unless it’s a Chinese exporter).

Fed Dilemma

“Unlike Trade War 1.0, when Chinese exporters and the RMB bore the brunt of the adjustment, this time round since tariffs are universal with minimum rate of 10%, there WOULD likely be some pass-through to the US consumers,” said Selena Ling, an economist at Oversea-Chinese Banking Corp. in Singapore. “This may complicate the picture for the Fed.”

Federal Reserve Chair Jerome Powell this week shrugged off pressure from the WHITE House and rejected arguments for an interest-rate cut from two dissenting officials, maintaining that the central bank needed to stay on guard against inflation risk.

“A reasonable base case is that the effects on inflation could be short-lived, reflecting a one-time shift in the price level, but it is also possible that the inflationary effects could instead be more persistent — and that is a risk to be assessed and managed,” Powell said Wednesday.

Also to be seen is whether the US levies spur more tariff barriers around the globe. While the EU has placed tariffs on Chinese electric vehicles and others have mulled similar curbs on cheap Chinese goods, most have eschewed Trump’s protectionist push.

“While we haven’t returned entirely to a ‘law of the jungle’ system, we have taken several huge strides back in that direction,” said Stephen Olson, a former US trade negotiator now with the ISEAS-Yusof Ishak Institute.

“Don’t assume this is the end of the story,” he added. “Trump regards this as an ongoing reality show. More ‘deals’ or further tariff increases are almost certain to follow.”

—With assistance from Jennifer A. Dlouhy and Anup Roy.

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