“Tariff hikes are plain bad news, as the historic precedent of the Smoot-Hawley Tariff Act of 1930 highlights,” Wood wrote. “This is an impoverishment day, not a liberation day, in our view.”
Trump marked what he called “Liberation Day” by announcing a dramatic overhaul of U.S. trade policy, including a uniform base tariff of 10% on all imports — a sharp jump from the pre-Trump 2.0 average of around 2.5%. The base rate will take effect on April 5.
In addition, the administration unveiled a second layer of “reciprocal” tariffs targeting major trading partners. Asia faces some of the steepest hikes, with Cambodia being slapped with a 49% levy, Laos at 48%, and Vietnam at 46%. India will be subject to a 27% rate, while China’s effective tariff rises to 54% when previously announced duties are included. Key U.S. allies haven’t been spared either, with Japan facing a 24% rate and the European Union 20%, although Canada and Mexico were exempted from the new measures.
The tariffs are aimed at addressing the U.S.’s ballooning trade deficit, which currently stands at around $1.2 trillion — the gap between the value of goods imported and exported. But analysts, including Wood, warn that the aggressive tariff policy risks triggering retaliatory moves and disrupting global supply chains.
Wood also pointed to an unexpected market reaction: “It is also very significant that the US dollar is weakening, which is the opposite of what the likes of Stephen Miran, chairman of the Council of Economic Advisers, would have expected.”Beyond the tariffs, Wood flagged what he sees as a troubling absence of internal economic restraint in the Trump administration. “It is becoming ever more apparent that the second Trump administration is missing a person on the economy to curb some of Donald Trump’s more extreme instincts, most particularly when they are driven by the notion that trade is a zero-sum game,” he wrote. He credited former Treasury Secretary Steven Mnuchin with having played that role effectively during Trump’s first term.Wood also called the upcoming departure of Elon Musk from the government in late May a negative development, and reiterated his view that U.S. equity markets remain vulnerable. “GREED & fear’s base case remains that the risk of a waterfall decline in the U.S. stock market is rising,” he wrote, citing not only elevated valuations but also “a panic unwind of passive investment where everybody owns the same stocks.”
Also read | Trump’s tariff bombshell sparks US recession fears—Will India pay the price?
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