Let’s be honest—last week was a bit of a rollercoaster for the economy. And by “bit,” we mean the markets basically went off a cliff. Between new tariffs, global pushback, and a nervous Fed, it’s no wonder investors and business leaders alike are biting their nails.
So, what happened? Let’s break it down in real terms.
Friday closed with some dramatic headlines:
The Nasdaq dropped 5.8%—officially entering bear market territory.
The Dow sank by 2,231 points in a single day.
The S&P 500 experienced its worst one-day loss since 2020.
Why? Tariffs. Lots of them. And not just threats—these are real, sweeping import taxes that are now active policy.
Starting April 5th, the U.S. imposed a 10% blanket tariff on all imported goods. But it doesn’t stop there:
EU: Now faces a 20% tariff.
China, Vietnam, South Korea, Taiwan: Between 25% and 45%.
North America (yes, including Canada and Mexico): Hit with 25%—though they’ve secured a temporary 30-day pause.
Exemptions? Only a few—some USMCA-covered goods, aluminum, lumber, and semiconductors. But even those already face tariffs elsewhere.
If these stick around, the effective U.S. tax rate on imports could jump from 3% to 23%. That’s not a typo.
China responded fast:
Slapped a 34% tariff on all U.S. goods.
Blacklisted 11 U.S. companies—no more business in China for them.
Restricted exports of rare earth minerals—materials we depend on for electronics and defense systems.
Other nations (like the EU) are holding off—for now—but they’re clearly watching and ready to respond.
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Markets are betting on a downturn. Treasury yields are up, and investors are expecting multiple rate cuts from the Fed this year. But here’s the twist:
Fed Chair Jerome Powell isn’t committing to anything yet. His latest message: “We’re waiting on more data.”
That makes sense—on one hand, we’ve got stubborn inflation; on the other, we’ve got slowing growth and volatile trade.
Construction spending saw a small bump in February—mostly from residential upgrades—but new architecture projects are drying up.
Manufacturing is clearly in contraction mode, with the ISM index dropping to 49 and orders falling sharply.
Tariff confusion is now translating into supply chain delays, shortages, and rising input prices—especially for critical materials like germanium and lumber.
The job market remains strong… for now:
228,000 jobs added in March, led by healthcare and retail.
But federal layoffs are climbing—especially from Trump/Musk’s push to slash government jobs.
Wages are growing at their slowest rate in nearly a year.
And business leaders? They’re cautious. Hiring is stalling, and many are in wait-and-see mode.
Car sales boomed in March—17.77 million units sold, as buyers tried to beat the tariff-induced price hikes. But don’t expect that to last. Higher sticker prices are coming, and with them, likely a pullback in consumer demand.
Inflation Reports: Coming Thursday and Friday. We’re expecting modest numbers now, but with tariffs in play, this lull may not last.
Small Business Sentiment: The NFIB Index will drop Tuesday. Spoiler: Confidence is slipping as uncertainty rises.
This isn’t just about trade policy—it’s about economic direction. The combination of higher import costs, retaliatory global measures, and uncertain monetary policy has thrown a wrench in the gears. And while some sectors are holding steady, many are bracing for impact.
The next few weeks will tell us a lot. Will tariffs stick? Will inflation return? And most importantly—how will the Fed respond?
Stay tuned. We’ll keep decoding the data so you don’t have to.