Market chaos signals 'sell America' trade as Trump tariff whipsaw threatens to upend the US economy's soft landing

Key Points

  • Trump's tariff policies have caused significant market volatility, with US equities experiencing a rollercoaster ride.
  • Investors are moving away from traditional safe-haven assets like US Treasuries and the dollar, signaling potential economic instability.
  • Concerns about stagflation and a possible "sell America" trade are escalating, with fears of a self-inflicted recession due to shifting trade dynamics.

Summary

The financial markets experienced a tumultuous week due to President Trump's fluctuating tariff policies, leading to a volatile ride for US equities and a notable shift away from traditional safe-haven investments. Long-term Treasuries saw their most significant surge since 1982, while the US dollar weakened against other currencies, an unusual reaction given the economic concerns. Analysts like Marc Chandler and Krishna Guha have expressed worries about a potential capital strike against the US, with investors selling off US assets. The tariff increase on China has pushed the US average effective tariff rate to its highest since 1903, likely leading to higher consumer prices. This situation has placed the Federal Reserve in a challenging position, balancing between growth risks and inflation, with a 50/50 chance of a recession this year according to some experts. The ongoing tariff disruptions have significantly complicated the Fed's strategy, potentially increasing the risk of an economic downturn.

yahoo
April 13, 2025
Stocks
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