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As futures in the US and spot markets in Asia crash on Trump’s doubling down on his “impose tariffs first and ask questions later” strategy, tensions are apparently reaching a boiling point. Case in point: the billionaire investor and CEO of Pershing Square, Bill Ackman, has just alleged that the US Commerce Secretary, Howard Lutnick, “profits when our economy implodes.”
For the benefit of those who might not be aware, President Trump has now imposed a baseline tariff of 10 percent on all US imports, plus a veritable host of reciprocal tariffs on some of the biggest trading partners of the US, with imports from the EU now subject to a 20 percent levy while those from China entailing an eye-watering tariff of 54 percent (20 percent fentanyl-related levy + 34 percent reciprocal tariffs).
Also, Steel, aluminum, vehicles, and auto parts remain subject to individual tariffs under Section 232, while tariffs on raw semiconductors are expected to materialize in the days and weeks ahead.
However, in a development that caused utter panic on Wall Street on Friday, China has now retaliated by imposing a reciprocal tariff of 34 percent on all imports from the US. This measure is expected to invite another retaliation from the Trump administration in a seemingly unending game of one-upmanship.
BREAKING: Trump is doubling down on the tariffs and says that he will not be making any deals unless it fixes the trade deficitspic.twitter.com/2mur5RQD0Q
— Special Situations 🌐 Research Newsletter (Jay) (@SpecialSitsNews) April 7, 2025
What’s more, despite feeling the heat over the ongoing bloodbath in markets across the globe, Trump appears to be doggedly pursuing his lofty goal of ending all trade deficits for good. This persistence precludes a benign outcome for the markets at large, at least for the foreseeable future.
US recession odds have increased to 62%, doubling over the past month
This figure will accrete to 100% over the coming weeks as long as the erroneous and ill-advised “liberation day” tariffs remain intact. These tariffs are bad for everyone except China and bankruptcy attorneys pic.twitter.com/MguURijjzc
— Julian Klymochko (@JulianKlymochko) April 6, 2025
Meanwhile, contracts trading on Polymarket are now assigning a 62 percent probability to a recession materializing in the US in 2025. What’s more, JPMorgan now also expects an economic contraction in the US.
This brings us to the crux of the matter. At the time of writing, Dow futures are down over 900 points or ~2.5 percent. Last week, the Dow posted losses of over 1,500 points on two consecutive days. Meanwhile, the S&P 500 futures are currently down 2.9 percent, while the tech-heavy Nasdaq-100 futures are down ~4 percent.
The country is 100% behind the president on fixing a global system of tariffs that has disadvantaged the country. But, business is a confidence game and confidence depends on trust.
President @realDonaldTrump has elevated the tariff issue to the most important geopolitical…
— Bill Ackman (@BillAckman) April 6, 2025
Earlier on Sunday night, Bill Ackman, who is generally considered a firm Trump supporter, penned a sympathetic if cautious X post on tariffs.
I just figured out why @howardlutnick is indifferent to the stock market and the economy crashing. He and Cantor are long bonds. He profits when our economy implodes.
It’s a bad idea to pick a Secretary of Commerce whose firm is levered long fixed income. It’s an irreconcilable…
— Bill Ackman (@BillAckman) April 7, 2025
However, as the bloodbath in markets resumed in earnest, Ackman seems to have changed his tone. To wit, the CEO of Pershing Square now believes that Howard Lutnick’s interests are not aligned with those of America, given the bond-heavy positions of his firm. For the benefit of those who might not be aware, bonds generally outperform during periods of economic contraction as they benefit from the attendant reduction in interest rates.
No. I am long America and he is short. I am aligned with our country and our economy and he is short.
— Bill Ackman (@BillAckman) April 7, 2025
When a netizen pointed out that Ackman was equally conflicted, given his stake in Nike, which stands to lose out from sky-high tariffs on Vietnam, the billionaire countered that he was “long America and he [Lutnick] is short.”
Of course, this is just a small emblem of the turmoil that is now sweeping across Trump’s inner circle. Should the crisis continue, one should reasonably expect such outbursts much more frequently and with added vehemence.
