The global financial markets have been thrown into turmoil after U.S. President Donald Trump announced sweeping "reciprocal tariffs" on nearly all trading partners. The move has sparked warnings from all quarters about a potential repeat of the disastrous 1930 Smoot-Hawley tariffs that worsened the Great Depression.
USA:
Tesla CEO Elon Musk has emerged as a vocal critic of the administration's trade policies, making direct appeals to President Trump while publicly mocking trade advisor Peter Navarro's Harvard economics credentials on social media. During a recent appearance at a political event in Florence, Musk advocated for eliminating transatlantic tariffs, proposing a bold vision for free trade between Europe and the United States.
In a shocking statement, Ed Yardeni, president of Yardeni Research, who holds a Ph.D in economics from Yale, told CNN: "We need this market to crash — to keep the pressure on the administration." This extraordinary remark highlights the severity of the crisis as markets worldwide reel from the policy shift.
Wall Street analysts and business leaders are sounding the alarm as President Trump's sweeping new tariffs trigger one of the most volatile market periods in recent memory. Howard Silverblatt, senior index analyst at S&P Dow Jones Indices with over four decades of experience, said the dramatic swings are unlike anything he's witnessed in his long career. "That's enormous," Silverblatt remarked, attributing the turbulence to profound market uncertainty.
The economic fallout has drawn sharp criticism across sectors. BlackRock CEO Larry Fink, who heads the world's largest asset manager, warned that the tariffs could fuel inflation and accelerate an economic downturn. "Most CEOs I talk to would say we're probably in a recession right now," Fink told attendees at an Economic Club of New York meeting. His concerns were echoed by investment director Russ Mould of AJ Bell, who noted investors fear significant damage to corporate profits and a major growth slowdown.
JPMorgan Chase CEO Jamie Dimon warned on Monday that Trump's tariffs could "raise prices, tip the global economy into recession, and weaken America's standing in the world by tearing up its alliances." Former Federal Reserve official James Bullard drew direct parallels to the Smoot-Hawley disaster, telling CNBC: "Global trade collapsed, and the Great Depression was on. That's what has people worried about this."
The political backlash has been swift and bipartisan. Republican Senator Rand Paul said, "If Trump were to back off on the tariffs, I think the economy could rebound from all this." Democratic Senate Minority Leader Chuck Schumer warned of a possible recession and pushed for a vote on legislation requiring congressional approval for new tariffs, declaring: "Side with Donald Trump or his destructive policies, or side with the American people."
Florida Congressman Maxwell Frost channeled growing populist anger, denouncing what he called the "billionaire takeover of our government" and promising resistance both at the ballot box and in the streets. As market volatility continues and economic warnings multiply, the tariff dispute appears poised to reshape global trade relationships and domestic politics alike.
The human impact is already being felt - from North Dakota farmers like Bob Kuylen, who lamented, "We still haven't recovered from the last tariffs," to Mexican auto workers in Toluca facing production halts at Stellantis plants.
Hedge fund billionaire Bill Ackman issued perhaps the most dire warning on X: "If...on April ninth we launch economic nuclear war on every country in the world, business investment will grind to a halt, consumers will close their wallets and pocket books, and we will severely damage our reputation with the rest of the world that will take years and potentially decades to rehabilitate."
The international community has reacted strongly to Trump's tariff war, with leaders from various countries expressing their concerns and positions.
Japan:
Japan Prime Minister Shigeru Ishiba urged Trump during a phone call to reconsider the tariffs imposed on Japan. He noted that Japan is the largest foreign investor in the U.S. and expressed strong concerns that these tariffs could weaken the capacity of Japanese companies to continue investing. Ishiba emphasized that both countries should pursue mutually beneficial efforts instead of imposing tariffs.
Mexico:
Mexican President Claudia Sheinbaum stated that her country wants to avoid imposing reciprocal tariffs against the U.S., particularly on steel and aluminum, but she did not rule out such measures. Sheinbaum mentioned that Mexico's Economy Secretary, Marcelo Ebrard, is set to travel to Washington for continued trade discussions with U.S. officials.
Russia:
In Russia, the Kremlin indicated that it is "closely monitoring" global oil prices, which have been declining along with stock markets. Kremlin spokesperson Dmitry Peskov attributed this to the U.S. decision to impose tariffs on many countries, noting that oil prices are crucial for the Russian budget.
Canada:
Canadian Prime Minister Mark Carney claimed the U.S. is "driving itself into a recession" while reassuring Canadians that his country can withstand the impact. He emphasized that Canada cannot control U.S. decisions but can influence them by focusing on domestic investments and support for its people. British Columbia Premier David Eby criticized the tariffs as "unjustified," arguing that they would ultimately drive up housing costs for Americans who voted for a president promising to lower them.
EU:
European Commission President Ursula von der Leyen has offered a "zero-for-zero" tariff compromise, though she emphasized Europe retains the right to implement countermeasures. The proposal reflects the delicate balancing act facing global leaders as they navigate the escalating trade conflict.
The Mainland and Hong Kong:
The immediate market reaction has been brutal. U.S. stocks lost US$6 billion in value in just two trading days, while Hong Kong's Hang Seng Index plunged more than 3,000 points to close at 19,828. The sell-off spread to mainland China, forcing state intervention. Central Huijin Investment, a unit of China's sovereign wealth fund, pledged to "resolutely maintain" market stability by increasing share purchases, with full backing from the People's Bank of China.
As markets reopened, Hong Kong Financial Secretary Paul Chan tried to calm nerves, insisting the city's markets were functioning "orderly" and that "we do not think the current volatility warrants drastic measures." But with Chinese state-backed funds like China Chengtong and China Reform Holdings scrambling to support markets, and experts warning of 1930s-style collapse, the global financial system faces its most severe test in years.
The coming days will determine whether this escalates into a full-blown trade war or if the crisis can be averted, with the ghost of Smoot-Hawley looming large over all deliberations.
(Source: Xinhua, CNN, CNBC, BBC)
Editor: Liu Yu
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