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Front Burner What did Trump just do to the economy?
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Apr 11, 2025 Justin Wolfers, a University of Michigan economics professor and New York Times columnist, dissects the chaos surrounding Trump's recent trade policies. He explains how a brief tariff pause initially boosted markets before they plummeted again. The discussion delves into the tariffs' implications for U.S.-China relations and the potential recession risks reminiscent of 2008. Wolfers also touches on the deeply intertwined trade dynamics with Canada and how these policies affect everyday consumers and the broader economy, particularly for younger generations.
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Market Relief from Tariff Pause
- Trump's tariff pause caused market relief, but he only partially reversed them.
- This reveals his willingness to change course under pressure, which calmed markets more than the actual pause.
Bond Market's Reaction to Tariffs
- The bond market reacted negatively to Trump's tariffs, indicating a loss of trust.
- Rising interest rates on US bonds reflect this concern, increasing the cost of government debt.
Impact of Tariffs on China and US
- High tariffs on Chinese goods are like closing the border, hurting both countries.
- However, China can trade with other nations, while the US is in a trade war with everyone.