Welcome to the Deep Dive. Today, we're going
to get straight to the chase. Newly imposed tariffs,
they've sent some serious shock waves through
the economy and ignited a pretty fierce political
debate. Our sources for this are financial market
analysis from April 2nd, 2025, and an April 3rd
political and economic news briefing. So our
mission really is just to cut through the noise
and figure out the core implications of all this.
for you. What immediately jumps out, I think,
is just the speed, right, and the force of the
market's reaction. It wasn't like a slow trickle.
It was abrupt. Absolutely abrupt. Yeah. Futures,
you know, those contracts predicting future value
for the big indices, they all just plummeted.
S &P 500 futures down 3%. The Dow futures dropped
2 .4%. And the Nasdaq 100 futures saw a really
big 3 .3 % dip. Wow. And here's something interesting.
Megacap tech companies, they really bore the
brunt. Apple stock, for instance, sank by a frankly
staggering 6 .5%. 6 .5%. Yeah. It just starkly
highlights how vulnerable even these massive
tech firms are to, well... global supply chain
stuff, especially with that aggregate 54 % tariff
now on goods from China. A huge manufacturing
hub for Apple. A huge hub, yeah. And it wasn't
just Apple, right? No. No, others like Microsoft,
Nvidia, Amazon. They all felt the pressure, too.
It just really hammers home how interconnected
everything is. You tweak a policy here, and bam,
immediate ripples across borders, across sectors.
Exactly. And it wasn't only the Giants feeling
it. The Russell 2000 that tracks smaller companies,
it also tumbled by 4%. 4%. So that broader decline,
it suggests these tariffs aren't just hitting
specific sectors. It feels like they're fostering
this wider unease about the whole economic outlook.
That's kind of a crucial takeaway, I think, for
assessing the systemic risk. Yeah, and what's
interesting or maybe worrying is the anxiety
underneath it all. The market analysis we looked
at said concerns about these tariffs harming
the U .S. economy, maybe fueling inflation, those
worries were already bubbling under the surface.
This sudden move just seems to have kicked those
anxieties into, well, overdrive, hence the big
sell -off. OK, so let's try and unpack the big
question everyone's asking. Yeah. Are these eye
-watering tariffs, that's a quote from Adam Hetz
at Janus Henderson Investors, are they just a
tough negotiating tactic or do they signal something
more fundamental, a potentially painful shift
in our economy? Hetz points out the administration
seems willing to tolerate market pain. But the
real question, he says, is how much tolerance
there is for true economic pain as negotiations
unfold. That quote really captures it, doesn't
it? The high stakes, the sheer uncertainty. Are
we just looking at a temporary jolt or is this
the start of something longer, more disruptive?
To get a sense of the potential scale, maybe
we should look back. Our sources point to a pretty
compelling parallel, actually. The tariff of
abominations back in 1828. The tariff of abominations,
that name alone tells you something wasn't right.
It really does. This tariff imposed incredibly
high average import duties. We're talking over
25 % and peaking above 60 % on something. And
it had a hugely negative impact on the southern
economy, which relied heavily on imported goods.
Meanwhile, it benefited the industrial north
by protecting their newer industries from cheaper
foreign competition. And it hits specific things
hard, right? Like raw materials. Exactly. Hemp,
for instance. The duty went from thirty five
to forty five dollars a ton, and it was even
scheduled to go up to sixty dollars. So these
tariffs basically just jacked up the cost of
manufactured goods for the South. OK, so how
does that connect to now? Well, here's the critical
link. The news briefing we have states these
new tariffs could be the highest since the 1800s.
Yeah. Potentially even higher than the Smoot
-Hawley tariffs from the 1930s. And Smoot -Hawley.
Most economists agree that made the Great Depression
worse, didn't it? Ridely considered to have worsened
it. Yes, and if we think bigger picture I mean
the global economy is so much more tangled up
now than it was back then our sources say our
reliance on imports You know as a slice of our
GDP our total economic output. It's roughly tripled
since the 1930s tripled Wow Yeah, so that suggests
tariffs at similar levels today could have a
much much bigger impact because we're just so
much more integrated globally That's a really
crucial point. So OK, what immediate economic
ripples are we seeing or can we expect? And how
might this actually affect people's wallets?
One immediate concern is inflation, right? Prices
going up. If you make imported goods more expensive
through tariffs, that can lead to higher prices
for consumers. Plain and simple. Which then complicates
things for the Federal Reserve. Exactly. It makes
their plans for monetary easing. That's when
they lower interest rates to try and boost the
economy much trickier. If inflation stays high
because of these tariffs, the Fed might think
twice about cutting rates, which could, you know,
slow the economy down. And we're already seeing
hits on retailers, aren't we? Oh, yeah. Big time.
The sources mention Nike down 8 .3 percent and
Walmart off by 6 .2 percent. Huge drops right
after the tariffs hit major production hubs like
Vietnam, Indonesia and China. So places they
make a lot of their stuff. Precisely. Retailers
who rely on those imports face higher costs.
And where does that pressure usually end up?
Passed on to us, the consumers. Right. Economist
Justin Wolfers had a pretty stark assessment
mentioned in the briefing. He basically said
the US will now have the highest tariffs in the
industrialized world. That's a major policy shift.
Highest in the industrialized world. And it sounds
like this impact won't be spread evenly either.
No, definitely not. The Axios analysis highlighted
in the briefing, it paints a pretty concerning
picture for different income groups. How so?
They estimate that the poorest 20 % of Americans
could see their disposable income shrink by a
pretty substantial 5 .5%. That's based on an
estimated average tariff around 20%. 5 .5%. That's
a big chunk for people already struggling. It
really is. And even the middle 20%, the estimate
is a hit of roughly $3 ,800 per year. It raises
a really important question about economic equity.
Lower income households tend to spend a bigger
slice of their income on basic goods, right?
And a lot of those are imported, so tariffs on
those goods, they're going to squeeze those budgets
the most disproportionately. So it's not just,
oh, things cost a bit more. It could be a real
financial squeeze, especially for those who can
least afford it. OK, let's pivot slightly. What
about the global reaction? How are other countries
responding? Predictably. Not well. The initial
reactions are definitely negative. The European
Union especially seems to be gearing up for a
strong response. Gearing up how? The briefing
says they're reportedly ready to fight back and
they're considering countermeasures that could
inflict, and I quote, real pain on influential
U .S. entities. Real pain, okay. That sounds
serious. Which entities are we talking about?
The briefing mentions big financial players like
JP Morgan, Bank of America, and also tech giants.
Google, the platform that used to be Twitter.
Why them specifically? Well, the EU actually
has a trade surplus in physical goods with the
US, but a deficit in services. So targeting these
service -based sectors, like finance and tech,
could be where they feel they have more leverage.
Interesting. So what kind of actions could the
EU actually take? What tools do they have? Well,
what's fascinating is they might use regulations
they already have, like the Digital Services
Act that governs online content. They could enforce
that more strictly, maybe leading to big fines
for the tech platforms. And they also have something
called the anti -coercion instrument that could
potentially allow them to restrict intellectual
property rights or maybe even ban certain social
media companies in Europe. Ban them? Wow. Yeah,
these actions could have really significant financial
and operational impacts on those companies. And
you can bet that would get the attention of U
.S. policymakers pretty quickly. OK, so beyond
the EU, are there wider international worries?
Oh, absolutely. The market analysis specifically
mentions the risk of boycotts. from key trading
partners like Canada, Mexico, Europe, even China.
Boycotts of US goods. Exactly. If they decide
to buy less from the US because of these tariffs,
that could really hurt American businesses and
slow down our economic growth even more. So this
really paints a picture of potentially escalating
global trade tensions, maybe even a full blown
trade war. Okay, let's bring it back home. What's
the political reaction been like here in the
U .S.? Well, we're already seeing pre -significant
divisions. Just yesterday, the Senate actually
voted on a resolution opposing the whole national
economic emergency declaration that was used
to justify these terrorists. Ah, right, the legal
mechanism. And how did that vote go? What's really
notable is the bipartisan nature of the opposition.
It wasn't just Democrats voting against it. All
the Democrats and independents voted against
it, sure, but they were joined by four Republican
senators. Four Republicans? Susan Collins from
Maine, Mitch McConnell from Kentucky. McConnell?
Yeah. Lisa Murkowski from Alaska, and Rand Paul,
also from Kentucky. Well, that's a significant
crack in party unity on this. Definitely. Four
senators from the president's own party voicing
concern like that. And it might not just be those
four. The briefing also mentions Tom Tillis from
North Carolina and Ron Johnson from Wisconsin
have publicly expressed unease too. So. This
level of Republican dissent, it suggests these
tariff policies might face a pretty challenging
road ahead. It makes you wonder about the political
strategy, doesn't it? The briefing kind of touches
on this historical difficulty, trying to sell
short -term economic pain for some promised long
-term gain. It even mentions Jimmy Carter's experience.
Right, his push for energy conservation back
in the day. Despite the potential long -term
benefits, it faced a lot of public pushback because,
well, it required immediate sacrifices. It's
a tough sell. It really is. Voters often focus
on their immediate economic situation, you know,
not some potential gain years down the line.
And that YouGov poll mentioned in the briefing,
it really highlights this tension. We're defined.
Well, 56 % of adults oppose the tariffs. But,
and this is the interesting part, 72 % expect
prices to go up soon because of them. So most
people don't like them, and most people think
they'll make things more expensive. Exactly.
That disconnect could create some serious political
pressure down the line. And we should probably
reiterate how these tariffs were put in place.
President Trump declared a national economic
emergency to get the authority right. Correct.
And that move itself has been controversial,
raising questions about the limits of presidential
power. It's likely part of why we saw that bipartisan
opposition in the Senate vote. OK. Now, the briefing
also covered several other political moves happening
around the same time. directly tariff related,
but maybe indicative of the current climate.
Yeah, they offer a sort of broader context for
the political landscape right now. Like what?
Well, there's the suspension of research grants
to Princeton University. The official reason
given was concern about anti -Semitism. But the
timing and the context, it strongly suggests
it might be retaliation, possibly linked to Princeton's
president defending academic freedom after similar
actions were taken against Columbia University.
And there was a quote mentioned. Yeah, from Rabbi
Gil Steinlauf, who seemed to downplay the anti
-Semitism concerns specifically at Princeton,
it just adds another layer, raising questions
about the government's relationship with universities
right now. Interesting. What else? Then there
was the situation with the law firm Wilkie Farr
and Gallagher. They hired Doug Emhoff, the second
gentleman, and shortly after faced pressure,
which resulted in this reported settlement. The
settlement involving? Involving the firm agreeing
to do a hundred million dollars worth of pro
bono or free legal work, specifically for conservative
causes, veterans, military families, law enforcement,
combating anti -Semitism. A hundred million,
that's a lot of pro bono work. It is, and the
circumstances certainly suggest an attempt to
wield political influence over the firm. It really
highlights the kind of heightened political tensions
we're seeing. Okay, what else was in that briefing?
Another thing was the the DOGE contract cuts.
These seem to be disproportionately hitting districts
represented by Democrats. Representative Don
Byers' district in Virginia was mentioned as
the hardest hit. His district, remind me. Uh,
VA, 08. Demographically, it's about 49 % white,
21 % Latino, 12 % black, 12 % Asian, median household
income around $125 ,000, and a strong Democratic
lien, PVID plus 26. So hitting a blue district
hard. Yeah. Any legal questions raised? Yes.
Representative Jamie Raskin from Maryland was
quoted questioning the legality of impounding
funds like this. So potential legal challenges
there, too. OK. Anything else, Major? Well, there
were significant layoffs reported at the Department
of Health and Human Services, HHS, a reduction
of about 20 ,000 workers, including voluntary
retirements. Twenty thousand. What's the potential
impact? Dr. Pina Tan, an infectious disease expert,
warned it could really hurt our ability to protect
against infectious diseases. It affects agencies
serving vulnerable populations, so real -world
consequences there. Right. And then shifting
to elections. A few things popped up there, too.
Yeah, quite a bit happening. In Texas, Attorney
General Ken Paxton is challenging Senator John
Cornyn in the Republican primary. They have pretty
different political styles, and Trump's potential
endorsement could be a big factor. Paxton actually
has a higher approval rating among Texas Republicans
right now, 60 percent, to Cornyn's 48 percent.
Despite Paxton's past legal troubles, the indictment,
the impeachment? Despite all that, yeah. Suggests
a potentially very close race. Interesting. What
about Michigan? Mallory McMorrow jumped into
the Senate race for the open seat there. She's
a pro -choice Catholic, married to a Jewish man,
ties to the auto industry, running on a progressive
platform, could be a compelling candidate in
a key swing state. And Georgia. Something about
Lucy McBath. Yeah, unfortunately, she suspended
her campaign for governor due to her husband's
health issues. That's sad news personally, and
politically, it could impact Senator John Ossoff's
reelection chances as her candidacy was expected
to help drive democratic turnout. Oh, okay. California.
Xavier Becerra, the current HHS secretary, is
running for governor. That's expected to create
a pretty crowded, competitive, democratic primary
field out there. Always crowded in California.
Arizona. Adelita Grijalva is running for her
late father Raul Grijalva's house seat, AZ -07.
It's a heavily Democratic district, D plus 15,
so she's very likely to win. Her initial statement
was pretty critical of Trump and Elon Musk, so
she'll likely be a vocal member of Congress.
OK. And one last thing. Eric Adams. Right. The
case against the New York City mayor was dismissed.
Notably, the judge expressed concern about potential
presidential leverage over a mayor. Another kind
of interesting side note in this whole political
narrative. Wow. Okay, so we've covered a lot.
The market plunge, the historical echoes, the
potential consumer pain, global pushback, the
political divisions, these other governmental
actions. As we wrap up this deep dive, what's
the main takeaway, the crucial point for our
listener? I think the key thing is that this
isn't minor tinkering. The swift, sharp, negative
market reaction combined with the very serious
concerns coming from economists, plus those historical
parallels we talked about. It all points to these
terrorists being a really significant development
with potentially far -reaching consequences.
Indedicable ones. Definitely unpredictable. Add
in the real possibility of international retaliation,
the EU, Canada, Mexico, China, and the complicated
political mess here at home. It just injects
a huge amount of uncertainty and risk into the
whole system. Absolutely. It really does feel
like we're at some kind of pivotal moment, which
brings us, I guess, to our final thought for
you, our listener, to maybe chew on. Given what
we know about terrorists historically, and how
deeply intertwined the global economy is now.
How might these protectionist moves ultimately
reshape things? Not just trade deals, but like
the fabric of our daily lives, the stability
of the whole global financial system. And maybe
what overlooks sectors or even consumer behaviors
might see the most unexpected, maybe profound
consequences as this all unfolds. That's a really
good question. What are those second and third
order effects we aren't even thinking about yet?
Exactly. Definitely something to mull over. Thanks
for diving deep with us.