Contagion. . .

(Contagion. . .)

It is the day after President Trump announced the Day of Liberation where he labeled a series of tariffs that have gone into effect. Globally, in affected nations, their indigenous markets are responding. On Wall Street, the Dow is down 1200+, the Nasdaq about a thousand, and Stanard and Poor is more poor by some two hundred.

In Germany, the DAX index is down almost six hundred. In Japan, its Nikkei is negative by a thousand, the London Financial Times is off 150 and the CAC Exchange in Paris is down 250. While all these declines are spectacular, worst performers in months, these transactions were all but predicted. Trump only made his Liberation Day comments only yesterday but there had been widespread expectation that some Trump tariff policy change was imminent.

High economics might be involved in tariff policy but in the end, it is all simple math. Any trade imbalance between the U.S. and other nations, in the chart the President precented yesterday, levies from China or India as examples, the American level is diminished. Over the next months, as trade negotiations continue, what might be unique nation to nation, product to product, managing the equalization process where American goods can be exchanged one to one. That would be free trade as well as fair trade.

President Trump has been talking about a American Golden Age but before a Jordan crossing can be affected, however, tariffs are being imposed. It could cause stagflation. It possibly will not do much for inflation. Tariffs are seen as a tax. The Market correction could persist. But it is still simple math. The faster countries bring their own levies to zero, the more rapid equalization is achieved.

President Trump is rolling the dice. He is gambling that the benefits of these levies will accrue more rapidly than the dis-advantages. Before stagflation and so on. As has been suggested, the threat of a tariff is more important than the actual implantation.  The President's speech on Wednesday demonstrated the score. Going forward, it will be those to adjust their own practices and put their own points on the board.