Well, well, well. Remember when everyone thought Trump was just bluffing about those August 1st tariffs? Turns out the man wasn’t kidding around. Markets got a harsh dose of reality on Friday when the president actually followed through on his threats, and let’s just say investors weren’t exactly throwing confetti.
After weeks of what can only be described as wishful thinking—with traders betting on the “TACO Trade” (Trump Always Chickens Out, because Wall Street loves a good acronym)—the stock market got served a reality sandwich. The S&P 500 dropped 1.77%, the Dow fell over 500 points, and the Nasdaq decided to join the pity party with a 1.61% decline.
But wait, there’s more! As if tariffs weren’t enough drama for one day, the July jobs report decided to crash the party too. The economy added a measly 73,000 jobs when economists were expecting 100,000. Even worse? The previous months got revised down by a whopping 258,000 jobs. That’s like finding out your bank account has way less money than you thought—never fun.
Trump, ever the showman, called August 1st a “GREAT DAY FOR AMERICA” on Truth Social (because of course he did). The new tariffs range from 10% to 41%, and here’s the kicker—if countries try to get sneaky by routing goods through other nations, they’ll get slapped with a 40% tariff. It’s like trying to sneak candy into a movie theater, except the consequences involve billions of dollars.
Some countries got lucky with slightly lower rates than originally threatened (Taiwan, India, Malaysia), while others like Brazil and Switzerland saw their rates go up. It’s basically international trade roulette, and nobody knows where the ball will land next.
The bond market had its own little freakout, with Treasury yields tumbling as investors suddenly remembered that trade wars aren’t actually easy to win (shocking, I know). The 10-year yield dropped 10 basis points to 4.25%, and suddenly everyone’s talking about Fed rate cuts again.
Here’s the thing that’s got everyone scratching their heads: for weeks, markets have been basically ignoring Trump’s tariff threats, betting he’d eventually back down. This strategy worked great—until it didn’t. Now traders are realizing that maybe, just maybe, they should take the guy at his word when he threatens to shake up global trade.
The silver lining? Some experts think this is just a temporary hiccup. As one strategist put it, “short-term swings can create good entry points for long-term investors.” Translation: if you’ve got nerves of steel and some cash lying around, this might be your moment.
China, interestingly, wasn’t on this latest tariff list—they get their own special deadline of August 12. Because apparently, trade wars need multiple acts to keep things interesting.
The bottom line? Markets just learned that sometimes the guy who says he’s going to do something crazy actually does it. Who would’ve thought? Now everyone’s watching to see if this is just the opening act or if we’re in for a full-blown trade war sequel. Either way, buckle up—it’s going to be a bumpy ride.