It’s been a wild few days for the US economy. President Donald Trump’s jabs at Federal Reserve Chair Jerome Powell are affecting markets. Investors are ringing alarm bells with the assets they’re buying and mostly selling – and suddenly making comparisons to the Great Depression. And everyone from the International Monetary Fund to Trump’s billionaire friends are issuing stark warnings about his massive tariffs. Here’s what you might have missed this week. Trump calls his Fed chair ‘a major loser’ Presidential relationships can change, but Trump has taken that to an extreme. After calling the Fed chair (whom he appointed in 2018) “a major loser” whose “termination cannot come soon enough last week, Trump seemed to soften up on Tuesday. He said he had “no intention” of firing Powell after advisers warned that terminating the central bank chief would backfire legally and economically, sources familiar with the matter told CNN. But the president’s outlook soured by Wednesday. “I haven’t called him. I might call him,” Trump said in an Oval Office executive action signing ceremony Wednesday evening. “I believe he’s making a mistake by not lowering interest rates, and I think, as well as we’re doing, we could do much better.” Trump doubles down on his tariff agenda On Wednesday, Trump said he could reimpose “reciprocal” tariffs on some countries in as soon as two or three weeks. The president had set a 90-day pause on his massive so-called reciprocal tariffs, which aren’t technically reciprocal, earlier this month to spur negotiations with other countries. “In the end, I think what’s going to happen is, we’re going to have a great deals, and by the way, if we don’t have a deal with a company or a country, we’re going to set the tariff,” Trump said in an Oval Office ceremony. “I’d say over the next couple of weeks, wouldn’t you say? I think so. Over the next two, three weeks. We’ll be setting the number.” If he reimposes the tariffs, it would be a significant re-escalation in the global trade war. The dollar hits a three-year low The stock market has been on a rollercoaster this week. Investors started with a steep Monday sell-off after Trump’s attacks on Powell. The dollar tumbled to a three-year low, and nearly every company in the Dow and the S&P 500 closed lower. Shares modestly rebounded Tuesday after Treasury Secretary Scott Bessent told investors that the US-China trade war is unsustainable and that he expects the battle to de-escalate, a person familiar with the matter confirmed to CNN. Stocks soared on Wednesday, but Trump still has a long way to go to ease investors’ fears. Despite the two-day rally, the S&P 500 has shed $6.5 trillion in market value since its record high in February, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices. Meanwhile, US crude oil has tumbled as investors fear a recession could tank demand. And US Treasury yields, which trade in opposite direction to prices, have surged in recent weeks. Alarming reports The IMF released a stark warning for the global economy and US prosperity in a Tuesday report. “We are entering a new era as the global economic system that has operated for the last 80 years is being reset,” the IMF said, predicting rapidly slowing economic growth – particularly in the United States – and reignited US inflation. South Korea’s Customs Service also reported that exports for the first 20 days of April declined by 5.2% compared to the same period last year – a sign for where global trade is heading under Trump’s tariff agenda. Billionaires are speaking out Billionaires are becoming more and more vocal about the economic consequences of Trump’s tariffs. Hedge fund Citadel CEO Ken Griffin, a supporter of the president, said Wednesday that tariffs are hurting America’s position in the world. “The United States was more than just a nation. It’s a brand. It’s a universal brand, whether it’s our culture, our financial strength, our military strength,” Griffin said at the Semafor World Economy Summit in Washington. “And we’re eroding that brand right now.” Griffin joins the list of wealthy business leaders diverging from the president. Last week, Ray Dalio, the founder of Bridgewater Associates, one of the world’s largest hedge funds, said Trump’s tariffs helped push America close to a recession — or perhaps even “something worse.”
Confused about Trump’s tariff war? There’s a good reason for that
TruthLens AI Suggested Headline:
"Economic Uncertainty Grows Amid Trump's Tariff Policies and Fed Criticism"
CNN
8.2
TruthLens AI Summary
The U.S. economy is currently facing significant volatility, largely due to President Donald Trump's recent criticisms of Federal Reserve Chair Jerome Powell and his ongoing tariff strategies. Trump has publicly labeled Powell a "major loser" and hinted at potentially terminating him, a move that many advisers warn could have severe legal and economic repercussions. Despite this, Trump has oscillated in his approach, stating he has "no intention" of firing Powell, yet expressing dissatisfaction with the Fed's decision on interest rates. This turbulent relationship with Powell coincides with Trump's announcement that he may reimpose reciprocal tariffs on several countries soon, which could escalate the ongoing trade war. He had previously paused these tariffs to encourage negotiations, but now seems poised to take a firmer stance, emphasizing his belief that better deals could be achieved through pressure on international partners.
Market reactions to Trump's statements have been dramatic, with the stock market experiencing significant fluctuations. After an initial sell-off, the dollar plummeted to a three-year low, reflecting investor concerns about the economy's direction. Although there was a brief recovery in stock prices following Treasury Secretary Scott Bessent's comments about the unsustainability of the U.S.-China trade war, the S&P 500 has still lost $6.5 trillion in market value since its peak in February. The International Monetary Fund has issued a warning about the global economy, predicting a slowdown in growth and rising inflation in the U.S. Additionally, prominent billionaires, including hedge fund executives, have begun to voice their concerns about the damaging effects of Trump's tariffs on America's global standing and economic stability, suggesting that the current policies may be leading the country toward recession or worse outcomes.
TruthLens AI Analysis
The article provides an overview of the recent developments in the U.S. economy, particularly focusing on President Donald Trump's relationship with the Federal Reserve and his ongoing tariff policies. It highlights the tension between Trump and Federal Reserve Chair Jerome Powell, as well as the implications of Trump's tariff strategies on both domestic and international markets. The piece aims to inform readers about the complexities of the current economic situation and the potential consequences of Trump's actions.
Tensions with the Federal Reserve
The article illustrates the turbulent relationship between Trump and Powell, noting how Trump's derogatory comments about Powell reflect broader uncertainties in U.S. economic policy. The inconsistency in Trump's statements—oscillating between expressing a desire to fire Powell and then stating he has "no intention" of doing so—creates confusion among investors and market analysts. This indecisiveness can lead to market volatility, as stakeholders react to the shifting narratives surrounding economic leadership.
Tariff Policy Implications
Trump's announcement regarding the potential reimposition of reciprocal tariffs signals a significant escalation in his trade policy. By emphasizing the possibility of setting tariffs within weeks, the article underscores the unpredictability of Trump's approach to trade negotiations. Such tariffs could further strain relationships with trading partners and contribute to a negative sentiment in the markets, particularly for industries reliant on international trade. The article suggests that Trump's tariff decisions may be viewed as a gamble that could either lead to favorable trade agreements or exacerbate economic tensions.
Market Reactions and Comparisons to Historical Events
The mention of investor concerns and comparisons to the Great Depression indicates a heightened sense of alarm in the financial community. This context helps to frame the urgency of the situation, suggesting that Trump's trade and economic policies might have far-reaching consequences. The article captures the anxiety among investors and economists, signaling that the current economic climate is precarious.
Public Perception and Political Strategy
By analyzing Trump's rhetoric and actions, the article hints at a possible strategy to galvanize support among his base while simultaneously navigating criticism from various sectors, including the financial community. The mixed messages may be designed to maintain a level of unpredictability that keeps both supporters and opponents on their toes. However, this could also alienate moderates who prefer more stable economic policies.
Potential Economic Scenarios
The article raises concerns about the potential fallout from Trump's tariff policies, suggesting that the U.S. economy could face significant challenges if trade tensions escalate. This could lead to increased prices for consumers, disruptions in supply chains, and a slowdown in economic growth. The reference to warnings from organizations like the International Monetary Fund highlights the broader implications of U.S. economic policies on global markets.
Overall, the article presents a complex picture of the current economic landscape, emphasizing the unpredictability of Trump's leadership and the potential consequences of his tariff strategies. The reliability of the information appears strong, given the references to credible economic sources and the analysis of current market reactions.