Daily Economic Update: April 3, 2025

Tariff Bomb Dropped - Now What?

Well, it happened. The long-anticipated tariff announcement is here. The summary? A 10% baseline tariff plus a sprawling list of reciprocal tariffs across 180 countries. You can find the full breakdown on major media outlets—or just check Trump’s Truth Social for the unfiltered version.

Markets weren’t thrilled. After a volatile trading session that somehow ended in the green, the tariff news hit, and as of this writing, S&P futures are down ~3.5%.

What’s the Math?

Social media was quick to notice an interesting pattern: the column listing “Tariffs Charged to the U.S.”—which includes currency manipulation and trade barriers—looks suspiciously like a simple ratio of the U.S. trade deficit with each country divided by their exports to the U.S. I haven’t verified it, but if true, it suggests these tariffs are being applied under a premise that the U.S. should have no trade deficit with any country.

Tariffs: A Congressional Comeback?

This blog won’t settle the global trade debate, but one question no one seems to be asking: Will these tariff experiments eventually push Congress to reclaim its role in setting trade policy? After all, tariffs are just taxes by another name.

Dalio’s Take on Second-Order Effects

Before the tariff announcement, Ray Dalio weighed in on tariffs (generally) - talking about not just the first order effects of tariffs but the second order and beyond.  Dalio also brings the tariff discussion back to the U.S. dollar where shares some musings on ‘exorbitant privilege’ and the strong dollar, thoughts that are worth a read.

Data? What Data?

There’s economic data today—jobless claims and ISM services—but let’s be honest, it’s all background noise. The real focus? How deep this equity selloff goes and whether Treasuries catch a flight-to-quality bid as global growth gets reappraised.

Buckle up.

XTODs:

XTOD: This guy cracked the tariff formula:@orthonormalist It’s simply the nation’s trade deficit with us divided by the nation’s exports to us. Yes. Really.  Vietnam: Exports 136.6, Imports 13.1

Deficit = 123.5  123.5/136.6 = 90%

XTOD: approaching, and surpassing, frightening level of Veep

XTOD: This has to be one of the biggest unforced economic policy errors in US history.

XTOD: Treasury Secretary Bessent tells @annmarie   the equity market selloff is quote 

“A Mag7 problem not a MAGA problem”

XTOD: 13 best  @naval quotes from newest episode with  @ChrisWillx :  ("I don't want to tell anybody how to live their life" edition)

1. “If you get 10,000 error corrections at anything, you will be an expert at it.”

2. “The people who are really extraordinarily successful didn’t sit around watching success porn, they just went and did it.”

3. “I’ll take the happy route that involves material success, thank you.”

4. “The journey isn’t just the reward, it’s the only thing there is.”

5. “Money solves money problems.”

6. “If you want to be successful, you have to be choosy about your desires.”

7. “You can create love anytime, the craving to receive it is the problem.”

8. “I think happiness is just being okay with where you are.”

9. “The easiest and best way to improve your quality of live is to observe your own mind and thoughts and be observant of yourself more objectively.”

10. “Can’t go against your gut, it’ll bite you later.”

11. “If I take myself too seriously, then I’m going to get trapped, I’m going to circumscribe myself again into a limited set of behaviors and outcomes that keep me from being free, spontaneous and happy.”

12. “If you want an automatic built-in meaning to life, have kids.”

13. “All of nature, all of society, all of capitalism, all of human endeavors are underpinned by physical violence.”

https://x.com/Geiger_Capital/status/1907568233239949431

https://x.com/DKThomp/status/1907584344593453506

https://x.com/DavidBeckworth/status/1907556005661090134

https://x.com/FerroTV/status/1907548620984885569

https://x.com/podcastnotes/status/1906869316076888312