Panic Spreads: Trump, Tariffs, and the Global Domino Effect

Almost certainly, today we will witness a veritable bloodbath in the markets. I’ve said it before: markets are inherently conservative by nature, but when fear takes hold, they overreact brutally, triggering a contagious panic in a domino effect. I must confess that these situations bring a certain degree of novelty to everyday life and awaken a touch of morbid curiosity. Some just want to see the world burn.

We saw it in recent days with the announcement and implementation of so-called reciprocal tariffs. Global markets shuddered: thousands of investors rushed to sell, causing colossal crashes and a loss of value unseen in a very long time. All of this, a direct consequence of the economic initiatives of U.S. President Donald Trump. Does Trump really know what he’s doing? Or is it all a product of stubbornness and ignorance? Watching the movie *The Apprentice* might give us a better sense of how Trump thinks.

We’re facing an unprecedented scenario. Almost artificially, a recession is being manufactured. Markets freeze, stop progressing, and slow down to a dangerously sluggish pace. It’s a highly unusual and complex situation. To move forward, every step must be carefully calculated, and more than just a simple plan is needed.

What’s most unsettling is that we find ourselves at an odd, in-between point. These reciprocal tariffs—as Trump called them—though they seem like isolated measures, are clearly aimed at Asia and the European Union with surgical precision. Trump has made it clear who his attacks are targeting, though there’s no way to tell whether his vision is short-term or long-term. Perhaps one day he’ll wake up and reverse it all.

The impact of these initiatives is twofold: on one hand, they cause a sharp slowdown in consumption; on the other, they accelerate the relocation of production. This is an atypical, complex, and extremely delicate scenario. The total impact will be very hard to calculate, and the variables influencing the final outcome are numerous.

Why? Because, as a general rule, governments seek to accelerate economic growth by stimulating both consumption and investment. But in this case, if they try, they could trigger a veritable viral implosion in the global economy—a perfect storm of devastating consequences. Too little speed and caution lead to recession. Too much speed and recklessness fuel inflation.

If they don’t act, the path to recession will be almost inevitable. Today, major economies will have to perform like true tightrope walkers, trying to boost domestic demand without overheating production. Too little consumption leads to business closures and unemployment. Too much consumption leads to higher inflation, followed by reduced consumption, closures, and more inflation. Responding to Trump’s measures requires focus, extreme attention to detail, and careful calibration.

It’s a titanic task, especially on days like today, when, following the announcement of these specific tariffs against China, the Asian giant didn’t sit idly by and responded in exactly the same way. Now we’re at a standstill in negotiations, where both sides are locked into defending their positions, and the heat of the confrontation prevents them from seeing the common interests that should prevail for the greater good.