Radio Atlantic Tariffs Are Paused. Uncertainty Isn't.
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Apr 10, 2025 Justin Wolford, an economist from the University of Michigan, discusses the recent turmoil in the stock market, sparked by President Trump's tariff announcements. He dives into how a sudden reversal of these tariffs led to a significant market rebound. The conversation highlights the delicate balance between investor sentiment and political decisions, exploring the psychological impacts of such announcements. Wolford also examines the broader implications for economic stability, warning of potential pitfalls for businesses amid growing uncertainty.
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Tariff Deja Vu
- Justin Wolfers's wife, Betsy Stevenson, laughed at Trump's tariff reversal, finding humor in the déjà vu.
- This mirrored Trump's first-term NAFTA approach: create a trade war, then "rebrand" the existing deal as a win.
Limited Gains, High Tariffs
- Most countries had low tariffs before Trump's actions, limiting the potential gains from renegotiations.
- The US now has the highest tariffs among advanced economies, exceeding even Smoot-Hawley levels.
Market Relief
- The stock market surge wasn't solely due to tariff reduction but also relief at perceived White House competence.
- The initial tariff threats exposed what seemed like profound incompetence and a disregard for recession risks.