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We recorded this podcast before markets closed on Monday, but at one point during the day the S&P 500 dipped into bear market territory — 20 percent off its recent high — before rebounding. In the two days following President Trump’s Liberation Day tariff announcement, the markets posted a 10 percent loss, the biggest two-day drop since the Covid crash. So what is going on?
I had just started my freshman year of college when the 2008 financial crisis hit and for at least the next four years there were plenty of courses on offer trying to explain what exactly happened, how to resolve it, and how to prevent it in the future. As much as credit default swaps and subprime mortgages might sound at least familiar today, it was not immediately apparent what was going on back then.
This time, it’s pretty clear to everyone what’s going on. Trump presented a plan to erect massive tariffs not seen since the first part of the 20th century. He claimed that they were reciprocal, but in fact appear to have little relation to the tariffs that other countries put on U.S. goods, and the market is now reacting to the possibility of slower growth and possibly a recession, coupled with higher prices on goods.
On this episode of the podcast, Elliott Morris and Mary Radcliffe join me to talk about some of the math behind what Trump says he’s doing and how the public is reacting.
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