‘Cause you’re hot, then you’re cold / You’re yes, then you’re no / You’re in, then you’re out / You’re up, then you’re down…”
Donald Trump seems to be taking inspiration from amateur astronaut Katy Perry’s hit song. First, he sent the global economy into cardiac arrest by announcing “reciprocal tariffs” on the rest of the world last week, which even the ordinarily sage The Economist called “barmy” (Experts theorised the nonsense tariff formula may well have been generated by Chat GPT).
Then, after a weekend of playing a golf tournament during the worst losses in US stock market history, he casually announced a 90-day freeze for most countries. This excluded China, which he raised to 125% because of “a lack of respect” – the country had announced retaliatory tariffs of 84%.
South Africa is now at the same baseline of 10% as most other countries after Trump initially hiked our tariffs to 30%.
🔍 Quick explainer: A tariff is basically a tax American buyers will pay on imported goods — governments use them to make foreign products more expensive, with the intention of protecting local industries or raising revenue.
Trump’s backtracking came after staff insisted the initial tariffs were NOT negotiating tactics. Turns out… they kinda were. Amid mixed messaging from top White House officials, Trump was asked directly on Monday whether his sweeping tariffs are negotiable or here to stay. “They can both be true,” Trump responded. Right.
But it looks like he was forced to backtrack after heavy pushback, including from within his own party and even his personal cheerleader, billionaire Elon Musk.
Here’s the thing: markets are like a VERY emotional toddler; they need stability. People buy and sell stocks at the least provocation and generally hate uncertainty of any kind. Trump is sheer chaos. While Trump’s tariff reprieve may have momentarily calmed the US stock markets, the world and investors are quickly learning that the world’s once biggest cheerleader of free international trade is not to be trusted. They will act accordingly.
Indeed, the initial fallout was severe. Per Al Jazeera:
🔹Three days of market losses – Thursday, Friday, and Monday – wiped out about $10 trillion in global equity value. That’s roughly 10 percent of global gross domestic product, and more than the combined GDP of 150 countries.
🔹The S&P 500, a stock market index that tracks the performance of 500 of the largest publicly traded companies in the US, suffered its deepest loss over four days since the benchmark’s creation in the 1950s.
🔹Analysts at JPMorgan estimated a 60 percent likelihood of a global recession, while Goldman Sachs and Morningstar put the odds between 40 and 50 percent.
Trump may think he’s executing the “Art of the Deal” – his famous book, and he certainly considers himself a master dealmaker. Part of his modus operandi is going in hard and forcing opponents to settle on favourable terms. “I know what the hell I’m doing,” he told guests at a Republican Party dinner on Tuesday, “I’m telling you these countries are calling us up, kissing my ass… They are dying to make a deal.” Charming.
But the world economy is a little different to the real estate world he comes from.
While things are looking up for now, it won’t stay that way, and Trump will guarantee that. Countries, including South Africa, now have ninety days to “kiss ass”.
Verashni is passionate about empowering citizens to hold those in power to account. She was previously editor-in-chief of the Mail & Guardian and HuffPost South Africa, and won the CNN African Journalism Award, among others.
