Trump's Tariffs Wipe Out over $6T on Wall Street in Epic Two-Day Rout

Original Article ↗ Hacker News Discussion ↗

Class and Distributional Effects

  • Many argue the tariff shock shifts costs onto workers and consumers: decades of wage stagnation + offshoring gains went to capital; now “fixing” it via higher prices, layoffs, and asset crashes hits the non‑wealthy again.
  • Others push back on conspiracy theories that “the shareholder class” wants a crash; they note most rich people’s wealth is in equities and margin loans, so a rout is not obviously in their interest.

Is There a Coherent Strategy?

  • One camp says it’s chaos and incompetence: tariffs mis-specified (based on bilateral deficits, not actual barriers), legally stretched as “emergencies,” and impossible to negotiate 180+ deals at once.
  • Another cites an articulated plan: crash equities → money flees into Treasuries → lower yields → refinance ~$9T of maturing debt cheaper; plus use tariffs to force “fairer” deals and reindustrialization.
  • Miran-style arguments: dollar reserve status forces persistent US deficits and hollowed-out manufacturing; tariffs and some dollar devaluation are framed as corrective. Critics call this “napkin math” that ignores services trade and political reality.

Expected Economic and Market Impacts

  • Prediction markets show elevated recession odds; commenters expect a hit to venture capital, startups, and IPOs (some already pulled).
  • Debate on “where’s the bottom”: anything from “we’re far from it” (possible 50–80% drawdowns from peak tech valuations) to “already priced in.”
  • Some see this as similar to 1930s trade wars; others compare it to COVID and Brexit: self‑inflicted, abrupt regime shift rather than organic cycle.

Tech, Trust, and US Global Role

  • Tech (Nasdaq) is particularly hard-hit; people note US services/ads/software exports aren’t in the administration’s deficit rhetoric, but will be prime retaliation targets (digital services taxes, local champions).
  • Long-running concern: foreign governments no longer trust US tech or US policy continuity. Tariffs plus Ukraine policy and NATO wobbles accelerate de‑risking from US supply chains, platforms, and defense.

Trade, Manufacturing, and Tariffs Debate

  • Supportive view: free trade helped elites, devastated manufacturing regions; high tariffs might finally rebalance, even if costly to “coastal professionals.”
  • Counterarguments:
    • Manufacturing output (by value) is high; jobs were lost mainly to automation.
    • Factories are slow, capital‑intensive bets and depend on policy stability; a 4‑year tariff tantrum won’t trigger rational reshoring.
    • Broad, deficit‑based tariffs are highly regressive and inflationary, hitting low‑end consumers hardest.

Politics, Psychology, and Responsibility

  • Explanations for support: “rust belt rage,” desire to “throw a bomb” at a system that offshored prosperity; older voters seeking relevance and a return to a remembered post‑WWII narrative.
  • Others see pure personal grift and power: tariffs as a lever to sell access and favors; or as part of a broader project to weaken US alliances and institutions.

Market Mechanics and Investor Behavior

  • Discussion of flows: institutions deleveraging, rotation into Treasuries and money‑market funds; gold had rallied earlier on “systemic fragility” and may now be seeing margin‑call selling.
  • Retail “buy the dip” behavior is noted, but historically underperforms; some suggest Roth conversions and bond reallocations while prices are down.

Escape Routes and Constraints

  • Legal/constitutional angle: Congress can reclaim tariff authority (and some bipartisan Senate interest exists), but would need House passage and likely a veto-proof majority.
  • Lawsuits under emergency‑powers statutes are possible but slow; meanwhile, damage to credibility and long‑term trade relationships may outlast any rapid policy reversal.