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US Recession Panic

We're now five days into this trade war, and things have deteriorated rapidly. As predicted, global retaliation is ramping up in response to Trump’s tariffs. China has just struck back in a major way, hitting U.S. exports hard. With Trump officially pulling the trigger, it’s now time for the U.S. economy—and everyday Americans—to face the fallout.

Trump’s narrative is overly optimistic: a world where global manufacturing returns to the U.S., no one retaliates, and American goods become cheaper. But the facts tell a different story. The U.S. economy is teetering on the edge of a severe recession.

Tariffs on Canada and Mexico have already forced U.S. auto plants to cut jobs. Nearly 1,000 American workers in powertrain manufacturing are being laid off. Stellantis has halted production in Canadian and Mexican plants, cutting demand for U.S. parts. Businesses are reacting to reality—not rhetoric.

U.S. companies see exports drying up and are preemptively reducing staff. Yes, recent labor numbers showed payrolls up by 230,000—but unemployment also rose to 4.2%. This is the calm before the storm. Tariffs haven’t fully rippled through the economy yet—but they will.

Even JPMorgan is sounding the alarm. The bank just raised its recession probability to 60%, citing three key risks: global retaliation, collapsing U.S. business sentiment, and worsening supply chain disruptions. In short, countries are hitting back with their own trade barriers, crushing U.S. corporate profits. Businesses are freezing hiring and halting expansion.

Reserve Currency In Crisis

Meanwhile, tariffs are pushing prices higher, which will lead to a crash in consumption. The U.S. dollar and markets are already feeling the heat—potentially sealing the coffin on this looming recession. Even Besson has warned of an impending collapse, drawing parallels to the calm before the crashes of 1998 and 2007.

When Trump took office, the U.S. dollar looked strong. Now, it's in freefall. His strategy of weakening the dollar to boost exports is backfiring—because the factories and investments he promised still haven’t materialized. As the dollar sinks, the cost of imported goods climbs—hitting U.S. consumers with a double whammy: tariff inflation and a weakening currency.

The dollar has now erased its post-election rally, and global investors are turning away from it. Even with Treasury yields falling, demand for the dollar is sliding—signaling that its safe-haven status is eroding fast.

China’s retaliation just confirmed what we feared: U.S. growth this year is likely to stall. With that, demand for dollars will drop even further. Trump's tariff formula—based on trade surpluses—is flawed. For example, China’s $300B surplus equates to a 34% reciprocal tariff. This wasn’t what the markets expected—they assumed product-specific tariffs, not a sweeping, disproportionate response.

That’s why we’re seeing a selloff across U.S. assets. The tariffs are too aggressive. They invite retaliation, destroy American purchasing power, and damage the dollar’s global reserve status.

The U.S. imports more than $600B from Europe, $438B from China, $150B from Japan, and $136B from Vietnam. These are all paid in dollars, reinforcing the currency’s global dominance. But with tariffs choking imports, that flow of dollars will slow. Whether consumers stop buying foreign goods or shift to local products, the result is the same—fewer dollars circulating globally, and the dollar's reserve status weakens.

This is a serious problem. Less global demand for dollars means less reinvestment into U.S. assets—and that spells trouble for markets, the economy, and ultimately, the American worker.

US Retirement Savings Are Done

The U.S. Stock Market: From Boom to Brutal Repricing

For the past two decades, U.S. stocks have delivered exceptional returns—and a big part of that was fueled by American consumers running massive trade deficits. This deficit pumped dollars into the global economy, sustaining both demand for U.S. assets and the strength of U.S. equities.

But that dynamic is about to change—dramatically.

As tariffs force U.S. consumers to buy more expensive domestic goods, profit margins will shrink, and living standards will decline. Normally, stock market performance doesn't perfectly mirror the real economy—but the U.S. is a unique case. American retirement savings are heavily tied to the stock market. Over 70% of 401(k) assets are invested in equities, with a large share concentrated in the S&P 500.

Now, we're witnessing one of the sharpest market declines in modern history, and the impact on personal wealth is devastating. As portfolios shrink, confidence crumbles—and the deeper the selloff, the worse the damage becomes. What’s worse is how mainstream media is downplaying the collapse. Some are even trying to spin it as part of a larger plan, saying things like:

“I don’t care about my 401(k) today... I believe in this man bringing back a trillion dollars in manufacturing.”

This mindset is flawed—both at the individual and systemic level. You cannot ignore widespread losses in wealth. When people feel poor, they spend less. Consumption dries up. And when spending slows, the recession deepens and drags on.

It becomes a vicious feedback loop. Lower spending leads to lower earnings, which pushes stock prices even lower. Rinse and repeat—until we hit a tipping point. A major capital event could be triggered, where markets fall off a cliff.

This is the reality of a financialized U.S. economy.

U.S. stocks have long been overvalued. The S&P 500 is trading at a price-to-earnings (P/E) ratio of around 23—but during recessions, this can collapse. In 2020, it dropped to 15. During the 2008 financial crisis, it fell to 10. We could be heading toward a similar breakdown if Trump’s trade war continues to escalate.

Right now, we're seeing a massive repricing of U.S. equities. Market multiples are being adjusted downward as investors recognize the truth: corporate profits are falling fast.

Trump’s trade war has pushed American stocks to the edge. The question now is: Will the Fed intervene? Will interest rate cuts or quantitative easing (QE) be enough to stabilize the system?

That’s the real dilemma.

If policymakers don’t act, retirement accounts could be decimated, turning this recession into a full-blown depression. But if they do step in with aggressive monetary stimulus, it could hammer the U.S. dollar and trigger a whole new set of problems.

Importers Are Eating the Tariffs — And It’s Getting Ugly

Let’s break down the real impact of Trump’s tariffs, because to understand how they hit the economy, you have to look at who’s actually paying for them. In every tariff equation, there are three players: the exporter, the importer, and the consumer. And in this case, it’s U.S. companies—the importers—that are getting stuck with the bill.

We now have clear evidence: U.S. automakers are absorbing the tariffs directly.

Stellantis just joined Ford in rolling out major promotional discounts to offset the cost of the trade war. Starting this Friday and running through April, buyers will get access to employee-level pricing. That’s not something you offer when your consumer base is strong—it’s a desperation move. It means the American consumer is tapped out, and automakers know it.

With these kinds of discounts now in play, it’s only a matter of time before other manufacturers follow suit, triggering a brutal profit squeeze across the industry. Buyers can stack employee pricing with dealer-negotiated cash incentives, which means the markdowns will be steep. Why? Because Trump hiked tariffs on Chinese goods by 54%, and someone has to eat those costs.

Spoiler: it won’t be China. Their exporters won’t absorb the hit. U.S. companies and consumers will.

Prices are already surging across retail giants like Walmart and Dollar General, and the squeeze is getting worse. What’s unfolding now is the opposite of the so-called “art of the deal.” It’s a self-inflicted wound. Ironically, this trade war is accelerating deindustrialization, not reversing it.

Bringing manufacturing back only works if your domestic consumer is healthy enough to support demand. But if the consumer is broke, what’s the point?

Trump keeps touting $1.66 trillion in pledges for U.S. manufacturing investment and 420,000 future jobs. But let’s be real—those are just pledges. If the American consumer keeps deteriorating, none of that capital will ever show up.

Worse yet, counter-tariffs and boycotts from other countries will crush U.S. corporate income abroad. That means profits will fall, especially in traditional industries like steel and autos, which already operate on razor-thin margins. These sectors can’t afford 34% retaliatory tariffs—they’ll be gutted.

Despite the rhetoric, the U.S. economy is still tech- and service-based. And the bulk of the investments Trump’s taking credit for? They’re from tech giants like:

• Apple – $500 billion

• Project Star (Oracle + OpenAI) – $500 billion

• Nvidia – $200 billion

• TSMC – $100 billion

• Microsoft – $40 billion

These companies can expand because their margins are strong. Microsoft’s gross profit margin is over 60%. They can weather tariffs. But manufacturers running on 10–20% margins? They’re toast if trade barriers keep going up.

And here’s the core issue: Washington still believes you can restore American industry by blowing up global trade. But ditching cheap Chinese goods isn’t a win if it crushes consumers and slashes living standards.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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