The "Liberation Day" Disaster

First off…

Now that that’s out of the way, let’s break down today’s disastrous tariff announcement.

In short? It’s bad. Really bad.

It all started with a heavily distorted version of tariff history. One filled with half-truths and outright falsehoods. Then came a moment that felt straight out of an economic fairy tale: a factory worker from a plant north of Detroit confidently claiming that tariffs would bring back the lost manufacturing jobs of a bygone era. No real explanation, no economic rationale, just blind faith because, well, Trump said so.

Then came the official announcement: a 10% tariff across the board. Wait, really? That’s it? Markets took a moment, processed it, and collectively thought, "Okay, we can work with that. It’s on the better end of expectations. It won’t completely strangle supply chains, wreck global commerce, or send inflation soaring. We can live with this." So stocks ticked higher in after-hours trading.

But then, the boards with the tariff rates for each country came out.

And that is when anyone with a grasp of history, economics, and markets muttered, "Oh shit."

The alarms sounded. The message was clear: These were no small numbers. Brace for impact. As stocks then began to plunge in after hours trading.

Unfortunately, things only got worse once people had time to dig into the details after the tariff announcement in the White House Rose Garden.

First, those so-called “tariff rates” the U.S. supposedly faces from other countries? Yeah… they’re not actually tariff rates at all. Instead, they’re just a country’s trade surplus divided by the value of its exports to the U.S. A completely misleading metric that has nothing to do with actual tariffs.

Props to @orthonormalist being the first to figure this out.

It’s clear that Asia was the primary target of these tariffs, while Latin America was largely spared. If this policy holds, expect supply chains to start shifting south.

Now, let’s talk about China’s actual tariff rate because it’s not just 34%. That’s on top of the existing 20%, bringing the total to a staggering 54%, according to Scott Bessent.

On the bright side, Mexico and Canada seem to have escaped major tariffs, aside from those tied to fentanyl-related trade. That means the USMCA (United States-Mexico-Canada Agreement) remains intact, which is a big win for North American trade stability.

But one of the biggest shocks? The end of de minimis. That’s the rule that let us buy inexpensive imports without getting hit with extra taxes. Essentially a small but important shield against government overreach into our wallets. Say goodbye to those cheap online finds staying cheap.

One way to force more people into traditional jobs? Cripple the online businesses that have flourished over the past decade.

Even the National Association of Manufacturers, the very group that should, in theory, be cheering for tariffs, came out against the new policies.

When the people who are supposed to benefit the most are sounding the alarm, you know something’s seriously wrong.

Side note: A Value-Added Tax (VAT) is not a tariff. Not even close.

Claiming otherwise is a straight-up lie because a country’s VAT applies equally to both domestic and imported goods. It’s a consumption tax, not a trade barrier.

So any argument trying to equate the two? Complete and total nonsense.

At the end of the day, tariffs open the door to more government corruption and a bigger, more intrusive government. (Props to Perth Tolle for reminding us of this fact.)

Here’s why: Instead of an economy where the best product at the best price wins, tariffs shift power to those who can buy government favors. The businesses with the right connections and deep pockets benefit, while everyday consumers, especially the middle class and the poor, end up paying the price.

And history already taught us this lesson. This is exactly why the U.S. abandoned this system in the late 1800s and early 1900s.

Sound familiar? Teddy Roosevelt vs. J.P. Morgan and the Robber Barons, anyone?

So, that’s the initial reaction anyway.

$SPY ( ▼ 5.85% )  $SPX ( ▼ 5.98% )  $DIA ( ▼ 5.43% )  $QQQ ( ▼ 6.21% )  $IWM ( ▼ 4.46% )  $VIX ( ▲ 50.93% )  

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