The Tariff Storm Hits

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04-04-2025

From the The Morning Dispatch on The Dispatch
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Russia is 'ready to contribute' additional military support to junta regimes in West Africa's Sahel region, Russian Foreign Minister Sergei Lavrov announced on Thursday. The Kremlin will provide weapons and training to a new joint force comprised of Burkina Faso, Mali, and Niger's ruling juntas, which together form the Alliance of Sahel States. Russia has sought to expand its influence in the Sahel after the juntas pushed away American and French security partners.
The director of the Russian government's sovereign wealth fund, Kirill Dmitriev, announced on Thursday that he had participated in 'key meetings' in Washington, D.C., this week. Dmitriev arrived in D.C. on Tuesday, after the State Department reportedly temporarily lifted sanctions to allow the Kremlin envoy and his two aides to obtain visas. On Wednesday, he met with Steve Witkoff, Trump's special envoy to the Middle East who has been involved in Ukraine peace talks, at the White House. Dmitriev is the first Russian official to visit the White House since the first Trump administration.
President Donald Trump fired six members of the National Security Council (NSC) after meeting with MAGA activist Laura Loomer in the Oval Office, multiple news organizations reported Thursday. Loomer reportedly provided a list of NSC staffers she believed should be ousted—alleging they were disloyal to the president—in a meeting with Trump, Vice President J.D. Vance, White House chief of staff Susie Wiles, Commerce Secretary Howard Lutnick, and others. The New York Times reported that National Security Advisor Mike Waltz, present for part of the meeting, 'briefly defended' some of the officials—who included the NSC's senior directors for intelligence, international organizations, and legislative affairs—but was unsuccessful in saving their jobs.
On Thursday, the Pentagon's Office of Inspector General, an independent federal agency tasked with overseeing the Department of Defense (DOD), announced an investigation into the Trump administration's use of a commercial messaging app, Signal, to coordinate military strikes against the Houthis in Yemen last month. Steven Stebbins, the office's acting inspector general, said in a memo to Defense Secretary Pete Hegseth that he is investigating whether the use of Signal 'complied with DOD policies and procedures.' He added that the inquiry came at the request of GOP Sen. Roger Wicker of Mississippi and Democratic Sen. Jack Reed of Rhode Island, the chairman and ranking member of the Senate Armed Services Committee, along with other individual members of Congress.
The Department of Education sent letters to state commissioners leading their respective K-12 education agencies on Thursday, ordering them to abide by current federal anti-discrimination laws or face losing federal funding. 'Federal financial assistance is a privilege, not a right,' the Education Department's acting assistant secretary of civil rights, Craig Trainor, said in a press release. He added that some school districts, through diversity, equity, and inclusion (DEI) policies, 'flout or outright violate' federal anti-discrimination requirements. The Education Department distributed forms to state commissioners certifying compliance with those requirements, requiring them to be signed and returned within 10 days.
One of the world's largest car manufacturers, Stellantis, confirmed Thursday that it was suspending production at two assembly plants in Mexico and Canada. The plants produce both gas-powered and electric vehicles, including for brands like Jeep, Chrysler, and Dodge. The car manufacturer temporarily laid off more than 900 U.S.-based employees in Michigan and Indiana following the pause, which a Stellantis spokeswoman attributed to President Trump's 25 percent tariffs on cars and car parts. In Canada, about 4,500 Stellantis hourly workers were also temporarily dismissed.
All three major stock indices were down at close Thursday, the first full day of trading following President Trump's announcement of a sweeping U.S. tariffs regime. The Dow Jones Industrial Average fell 3.98 percent, the NASDAQ plummeted 5.97 percent, and the S&P 500 was down 4.84 percent. The losses marked the worst single day for each index since 2020.
Powerful storms and tornadoes ripping through the midwestern and southern United States killed at least seven people on Wednesday and Thursday—five in Tennessee, one in Indiana, and one in Missouri—and wrought destruction on buildings, vehicles, and local infrastructure. Extreme weather conditions are expected to persist going into today, with the National Weather Service issuing flood watches in parts of 12 U.S. states.
Ahead of his sweeping tariffs rollout, President Donald Trump assured Americans that the short-term economic pain would be well worth the long-term gain. Time will tell whether his constituents—and the markets—agree, but early fallout from the administration's latest and most dramatic escalation in its global trade war hints at more than just a 'little disturbance.'
Speaking from the White House Rose Garden on Wednesday, Trump unveiled plans to impose tariffs on nearly all imports to the United States. 'This is one of the most important days, in my opinion, in American history. It's our declaration of economic independence. For years, hardworking American citizens were forced to sit on the sidelines as other nations got rich and powerful, much of it at our expense,' he said. 'With today's action, we are finally going to be able to make America great again, greater than ever before.'
But Wall Street seemed to disagree. On Thursday, the U.S. stock market suffered its worst day since 2020, with all three major indices cratering in the wake of the announcement: The Dow Jones Industrial Average dropped 3.98 percent, the S&P 500 sank 4.84 percent, and the NASDAQ plummeted 5.97 percent.
The long-awaited tariffs, declared in the name of a 'national economic emergency,' included 10 percent 'baseline' duties on most foreign goods, as well as higher, tailored tariffs targeting countries Trump accuses of 'cheating' the United States. Together with the president's previous rounds of levies, the expansive tariffs package will bring the U.S.'s effective tariff rate even higher than it was during the Great Depression. Economists are now warning the administration's dramatic break from the conservative movement's longtime embrace of free trade could isolate the U.S. economy and plunge the country into a recession.
Trump's 10 percent flat duties are set to take effect on Sunday, while his higher tariffs—what the administration describes as 'reciprocal'—will go into place on April 9. But the latter levies don't actually correspond with the alleged offenders' restrictions on U.S. imports. Rather, the government calculated the rates by dividing the country in question's 2024 bilateral trade deficit by its exports to the United States, and then dividing the result by two. 'Reciprocal tariffs are calculated as the tariff rate necessary to balance bilateral trade deficits between the U.S. and each of our trading partners,' the U.S. Trade Representative said in a statement explaining the algorithm.
The problem with this calculation, economists say, is that it relies on the false assumption that uneven bilateral trade balances are a reasonable proxy for foreign trade barriers. In reality, deficits are not always reflective of unfair trade practices or an unhealthy economic relationship. As Kevin Williamson wrote today in a piece for the site:
Tariffs are not the only reason—or even the main reason—for imbalanced trade among nations. U.S. firms and consumers buy a lot of tropical fruit and low-cost goods from firms in poor countries where the people do not buy a lot of Boeing products or $300 selvedge jeans made in the United States on account of their being, you know, poor.
At the same time, the metric failed to factor in the United States' own existing restrictions on buying foreign goods, from sugar quotas to the 1920 Merchant Marine Act. 'It simply assumes that the United States is some sort of free trade paradise that's being abused by foreign countries,' The Dispatch's own Scott Lincicome told TMD. 'Trump imposed hundreds of billions of dollars in new taxes without any congressional authorization or public input, and he did so based on a methodology that is utterly detached from economic reality.'
Using trade deficits for the formula has led to some 'bizarre outcomes,' he added. For example, even countries with free trade agreements with the United States—including Singapore, South Korea, and Australia—have been caught up in the tariff spree. As did countries with which the U.S. has a trade surplus. Meanwhile, a handful of countries—including Russia, Cuba, Belarus, and North Korea—were spared on the grounds that sanctions already prevent a meaningful trade relationship.
For Trump, the sweeping tariffs—together with 25 percent duties on cars and car parts that took effect this week—are a way to usher in another 'golden age' of American manufacturing. According to the U.S. Trade Representative, more than 90,000 plants have closed and upwards of 6.6 million manufacturing jobs have been lost since 1997. By intentionally driving up the price of foreign goods, the administration hopes to encourage foreign companies to move their factories to the United States, spurring new job creation in a long-declining sector.
But because the U.S. still relies heavily on foreign suppliers for intermediate goods like raw materials and car components, economists worry the tariffs will have the opposite effect. 'For this to be successful, you need to have long-term stability in the trade policy. I think what's problematic here is that we have recently seen that actual investment in the U.S. has declined,' Felix Tintelnot, an associate professor of economics at Duke University, told TMD. 'The cost of doing production in the U.S. just went up.'
Experts also worry this latest move could expedite a looming recession. The U.S. dollar fell against most major currencies on Thursday—contrary to conventional wisdom that tariffs strengthen the value of the local currency—as investors seek out safe assets. 'In past waves of tariffs or tariff announcements by the administration, usually the U.S. dollar strengthened relative to other currencies. Now we are seeing the opposite: Capital is leaving the United States,' Tintelnot said. 'How can you plan your business operations in this way? It's really astonishing.'
Already, an internal blame game has begun to play out among top U.S. officials. According to a Tuesday report by Politico, many people within the administration are preparing to point the finger at Commerce Secretary Howard Lutnick—a main champion of the sweeping tariffs plan—should the fallout persist. Lutnick is 'a new voice at the table pushing crazy shit,' a person familiar with the situation told the outlet. 'I don't know anyone that isn't pissed off at him.'
But for stalwart supporters of the protectionist trade policy, upending the global economy is the whole point. Through tariffs, they argue Washington should accept—and even embrace—the decline of the U.S.-led liberal world order.
'China is now rising as a pure competitor. The U.S. cannot be a unipolar hegemon like it was when the Cold War ended,' Oren Cass, the founder of the think tank American Compass, told Jon Stewart on a Monday episode of The Daily Show. 'We absolutely want a strong economic and security alliance. It's not going to be the whole world, because China's going to have its own sphere as well. But what we want to have within our sphere is a few things that, in the past, the U.S. didn't necessarily ask for. We're going to want balanced trade, where in the past we were happy to let the manufacturing go elsewhere.'
But experts warn sweeping tariffs, far from shoring up the U.S.'s existing alliances, actually risk pushing longtime partners into China's orbit. On Monday, for example, Beijing announced plans to coordinate its response to the new American duties with South Korea and Japan.
'It's just a massive gift to America's adversaries,' Lincicome said. 'By isolating the United States economically, it makes us weaker—it makes our manufacturing industry weaker, it makes our economy weaker. But it also gives close trading partners more incentive to cozy up to the second biggest dog on the planet, and that's China, because they have no economic alternative.'
Steve Hayes
On the surface, it'd probably be hard to find a less sympathetic industry for tariff opponents to focus on than those in the wine importing business. Nobody's going to shed any tears for the rich guy with a French wine fetish whose $500 bottle might soon cost $600. But while it's true that fine wine collectors and those who sell to them can adjust to higher costs, many smaller companies that work in the wine business cannot.
Economics April 3, 2025
Nick Catoggio
Without meaningful representation, anyway.
Policy April 4, 2025
Michael Warren
His claim on Fox News about a survey that costs $1 billion doesn't hold up.
Policy April 4, 2025
Kevin D. Williamson
Trump's tariff plan is slapdash even by his standards
Policy April 4, 2025
Stephen Gutowski
The high court upheld a Biden-era ban on 'ghost guns.'
Politics April 4, 2025
Charles Hilu
But most Republicans seem to be in his corner.
Writing for the New Atlantis, M. Anthony Mills argued that the Trump administration's efforts to gut the National Institutes of Health before the recent swearing in of its director, Jay Bhattacharya, may end up sinking the chances of serious reform. 'What we have seen these last two months is not an extreme version of past Republican efforts to rein in the federal bureaucracy; it is a challenge to the basic social contract underlying federal science,' he wrote. 'As in other domains of public policy, from trade to national security, the Trump administration has upended half a century or more of bipartisan consensus—in this case, regarding the federal government's role in supporting academic science.' As a well-credentialed outsider, Bhattacharya is well-positioned to productively challenge the status quo, Mills argued: 'But the extreme actions taken by the administration prior to his directorship have created an altogether different problem: a breach of trust with the scientific community, both inside the NIH and in the wider biomedical research enterprise, that may hamper efforts to implement enduring reforms, including those preferred by Trump's supporters.'
CNN: NYC Mayor Eric Adams Says He Will Run for Reelection as an Independent
NOTUS: Republicans in Congress Can Stop Trump's Tariffs—But They Don't Want To
Republican Sen. Josh Hawley … blamed Congress for taking a backseat, but he told NOTUS he would want to use legislation to set tariff rates even higher.
'If Congress doesn't like it, they should ask themselves why they've given presidents, not this one, but presidents, this authority over 50 years,' Hawley said. 'It's like, 'Hello, wake up, smell the coffee; this is what Congress has done for 50 years.' Some of my colleagues suddenly just discovered it, it's like, 'Wait, he has this authority?' It's like, 'Yeah, you gave it to him.''
On Thursday, Bruce Springsteen announced plans to release seven 'lost' albums this June. The albums will include 74 unreleased songs recorded throughout the Boss' five-decade career, and frankly, we can't wait.
How are the new tariffs shaping up to affect your daily life?