| A GREY SWAN PUBLICATION | Thursday April 3, 2025 | Swan Dive — April 3, 2025 Well, the pageantry is over. The flags have been refurled. Maintenance crews are primping the rose beds. And the oversized placards bearing the title "Reciprocal Tariffs" West Wingers had made up at Staples have been stored neatly in a closet.
Yesterday's Rose Garden spectacle wasn't just a policy announcement — it was part eulogy for "cheap stuff" and the soft global capitalist consensus that made it all possible. Trump has a vision for a Golden Age.
And while the tariffs are just the beginning. Markets proved Newton's Third Law of Motion – "every action has an equal and opposite reaction" – is a law in the economy and politics, too.
With the stroke of a pen and a podium full of flags, the president imposed a 10% baseline tariff on all imports, layered with targeted penalties for China, the EU, and our favorite "strategic competitors."
Here's what happened next: 📉 Futures Fell Off a Cliff In real-time, as Trump went line by line through his tariff plan, Dow futures dropped over 1,000 points. Overnight S&P 500 futures slipped nearly 3%, Nasdaq futures down 3.5%. Not panic territory yet — but definitely not a love letter to tariffs.
Even the Roundhill Magnificent Seven ETF, loaded with AI darlings and Big Tech, saw a 5% pre-market plunge. 🧠 Bessent's "Mag 7" Shrug Treasury Secretary Scott Bessent tried to keep it cool on Fox News Special Report. When asked about the massive market pullback, he waved it off as a "Mag 7 problem," not a political one. "We've had a great run on Wall Street," he said. "This is about lifting up the rest of America. We're focused on small businesses, working families, not short-term jitters."
Still, acknowledging a 1,000-point drop while smiling for the cameras takes a certain kind of Zen.
He might be right. All three of the major indexes have been looking for an excuse to sell off since Deepseek spooked them off historic market highs on February 19: 
While the media is focused on the market reaction to yesterday's Liberation Day tariffs, the market has been looking for excuses to take profits since reaching historical highs on February 19, 2025. 🧱 Tariff Carve-Outs: Energy Gets a Pass In a not-so-subtle nod to domestic producers (and maybe a few Middle Eastern friends), Trump carved out crude oil, natural gas, and refined products from the new tariff structure.
The goal? Avoid energy inflation while waging economic war elsewhere. It's a strategic exemption that signals just how delicate the energy puzzle remains—even for an administration hellbent on trade shock therapy. Steel and semiconductors also get a pass… for now.
Energy, chips and steel. Throw in Greenland's rare earths. And cheap passage through the Panama Canal. You can get a pretty clear picture of where the Trump administration sees the future of the Golden Age. 💻 Semiconductor Skirmish: Let the Chip War Begin No such luck for the semiconductor industry. Imported chips now face new tariffs, reigniting the U.S.-China tech cold war. China's already pouring subsidies into homegrown fabs. U.S. companies, meanwhile, have to figure out how to keep supply chains running while dodging geopolitics and capital controls.
The irony? For the time being, both sides rely on Taiwan—and nobody wants to talk about that. Except maybe Pete Hegseth… 🪖 Defense Posture: Hegseth Drops the Glovess In Manila, Secretary of Defense Pete Hegseth didn't mince words: the U.S. military is "preparing for war" in the Pacific — not skirmishes, not deterrence, war.
The phrase landed like a lead balloon across foreign desks and served as a stark companion to Trump's economic salvos. Trade and military policy, once siloed, are now marching in lockstep toward confrontation. 🧠 Musk's to Exit DOGE, just not yet Meanwhile, back in Washington's techno-circus, Elon Musk may be stepping down from DOGE — the Department of Government Efficiency before his 130-day tenure is up. Or, officially, the mission is "accomplished."
Unofficially, sources say his meme-lord behavior and spontaneous policy shifts made him a liability. In fairness, organizing Washington around a man who tweets more than he reads briefing memos was always going to end in chaos.
It remains to be seen if "insane" protestors at Tesla dealerships are successful enough to get Musk to throw up his hands and say "Forget it!" If you don't want to upgrading government systems, make processes more efficient and root out fraud and abuse… then good luck. You'll have the government you deserve. The Day After Liberation Day It's day one. The day after. If Trump's trade war is a hammer, the economy is the anvil. And we're all somewhere in between.
The real question isn't whether prices will go up — they will.
It's whether the long-term payoff (reindustrialization, economic sovereignty) will materialize before the short-term pain becomes politically unbearable. It might. The 10-year Treasury yield dropped to nearly 4%, which will lower the cost of America's massive debt refinancing… but not enough.
Either way, the world we knew — cheap imports, global integration, smooth supply chains — is being mothballed, one tariff at a time, for now. 🗓️ Today @ 11 a.m. ET (For paid members only) We'll walk through: Check your inbox this morning for the link.
The end of cheap stuff isn't just a headline. It's the new baseline.
More soon,
Addison As always, your cheerful reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)
How did we get here? Find out in these riveting reads: Demise of the Dollar, Financial Reckoning Day, and Empire of Debt — all three books are now available in their third post-pandemic editions. You might enjoy one or all three. 
(Or… simply pre-order Empire of Debt: We Came, We Saw, We Borrowed, now available at Amazon and Barnes & Noble or if you prefer one of these sites: Bookshop.org, Books-A-Million or Target.)
Please send your comments, reactions, opprobrium, vitriol and praise to: feedback@greyswanfraternity.com |
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