It’s no use but to grin and bear it.
Less than 24 hours after proclaiming ‘Liberation Day’, US president Donald Trump’s unilateral decision to impose ‘reciprocal’ tariffs on much of the world seems to have backfired in a big way, sparking a massive global selloff some analysts say portends a long, deep recession — if not outright depression.
The US markets were already dropping in after-hours trading even as Trump was speaking from the White House Rose Garden.
Then all the major indices opened sharply lower on Thursday, with the Dow Jones falling more than 1,500 points for its biggest opening bell drop since 2021.
The S&P 500 shed 3.4% in early trading, while the tech-heavy Nasdaq took an even bigger hit, plunging 4.6%. Major brands with manufacturing in Asia took the biggest blows, with Nike and LuLuLemon falling nearly 13% each, and Apple down 9%.
While Canada was spared from much of the sweeping trade measures announced Wednesday, the Toronto Stock Exchange (TSX) still nosedived more than 700 points, reflecting widespread investor panic.
All the major economic blinkers were flashing red on Thursday morning; oil prices were down almost 8% with West Texas Intermediate falling USD$5.45 to $66.26. Western Canadian Select (WCS) pricing is based on a discount to WTI and is calculated using the calendar month average, not daily prices — so that shoe is yet to drop.
After falling almost $100 per ounce, gold prices were off about $15.78 to $3,110 per ounce. Gold is widely seen as a hedge against inflation so analysts expect it to start rising as the impact of the tariffs take hold and the US dollar starts falling.
In that regard, the Canadian dollar was actually up 1.5% to 71 cents. Bitcoin was down 5% — or $6,600 to $114,886.
Meanwhile, Asian, European and UK indices all saw sharp declines in the wake of Trump’s move, which introduces a minimum 10% tariff on imports. The impact is particularly severe for countries like China, Vietnam, Cambodia and Laos, which now face significantly higher tariffs.
Vietnam — a key hub for global supply chains — was hit especially hard, with a massive 46% tariff.
Analysts said that US economic growth could be reduced by as much as 2% while inflation will certainly move higher — a condition called ‘stagflation’ which is the worst of both worlds.
Trump’s tariffs were intended to protect American manufacturing, but the immediate reaction from the stock market suggests a different reality.
Instead of strengthening the US economy, the move has triggered widespread uncertainty, raising fears of a global economic slowdown.
In comments to reporters in Ottawa last night, Liberal leader Mark Carney suggested he prospect of a revision in the US was an even bigger threat to Canada’s economy than the tariffs themselves.