Global economy continues to panic due to trade war fears. While the US stock market faces its sharpest drop in 5 years, $2.7 trillion evaporated from the market. The cost per American household of the tariffs is estimated to be $3,500. President Donald Trump’s tariff policy has rocked the global markets. The tariffs announced by Trump were noted as the most severe trade restrictions imposed by the US in over a century. Accordingly, the US initiated additional tariffs on 185 countries. Tariff rates varied between 10% and 50%. Higher taxes were imposed on countries with which the US had high trade deficits. Major trading partners of the country, including the European Union faced a 20% tariff, China a 34% tariff, and Vietnam a 46% tariff. Following the decision, the European Union and China announced retaliatory measures. Concerns over the tariffs disrupted trade and supply chains more than expected. It raised fears of a widespread trade war that could lead to global economic slowdown. Worries increased about a disruption in global trade due to the tariffs. Additionally, predictions that tariffs would increase inflation also gained strength. Will the Fed Cut Rates? Concerns about a recession in the global economy in the US are reflected in expectations regarding the Federal Reserve. Expectations that the Fed will adopt a more aggressive rate cut policy to support economic growth strengthened. Fed fund futures hint at a 96 basis point cut by December. Prior to Trump’s announcement of tariffs, a 70-basis point rate cut was expected. JPMorgan noted in a research report titled “Blood Will Spill” that Trump’s new tariff decision increased the risk of a global economic downturn by 20 points. $2.7 Trillion Vanishes The New York Stock Exchange ended the day with a sharp decline yesterday amid concerns that President Donald Trump’s announced tariffs could push the economy into recession. The S&P 500 and Nasdaq indices experienced the largest daily losses since 2020. Yesterday on the New York Stock Exchange, the S&P 500 index lost 4.84%, the Nasdaq index lost 5.97%, and the Dow Jones index lost 3.98%. Following the tariff announcements, companies with global supply chains saw a significant drop in their stock prices. Apple’s shares dropped by over 9%, while Nike’s shares fell by more than 14%. Retailers mostly selling imported products, such as Five Below, saw their shares drop by around 28%, while Dollar Tree’s shares fell by 13%. Trump: Patient’s Condition Was Severe President Trump, in his evaluation of the decline on the New York Stock Exchange, said, “I think everything is going very well. Markets will explode, the stock market will explode.” Trump likened the US economy to a patient that needed surgery, saying, “The patient’s condition was severe. They have undergone an operation. It will be a booming economy. It will be fantastic.” Americans Will Foot the Bill Research has also started on how customs tariffs will affect American citizens. The think tank Advancing American Freedom, established by former Vice President Mike Pence, estimated that the latest tariffs would cost American families over $3,500 per year. The analysis stated that most families would see increases due to tariffs, effectively canceling out three years of wage increases. Yale University calculated that the tariffs announced on April 2nd would cost each household an average of $2,100. It was pointed out that all additional tariffs announced so far would cost households around $3,800.