‘Trump bump’ turns to a Trump slump – and there could be further tests ahead with tariffs on Europe
Fuelled by expectations of a Wall Street-friendly policy platform, a “Trump bump” pushed the S&P 500 up 2.5% by the time the ticker tape had been cleared.
The rally continued after his inauguration, with the index peaking 6.3% higher by mid-February.
Since then, however, a “Trump slump” has sent markets crashing back to where they started, accelerating in the last week of unpredictable moves.
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The reality of an economic program built on trade wars saw the S&P hand back all its post-election gains by Tuesday, then fall further as tariffs imposed by executive order were removed by presidential whim.
That Trump turned to tariffs should be no surprise.
They were a central campaign promise, the “most beautiful word” in the president’s limited lexicon. The belligerence and unpredictability with which they have been deployed, however, has left markets spinning.
On Tuesday, Trump placed tariffs on America’s three largest trading partners, two of whom – Mexico and Canada – it has a free-trade agreement with. They both faced 25% levies on exports to the US (10% on the Canadian heavy crude oil on which the US still depends to keep petrol prices down) while levies on Chinese imports doubled to 20%.
Within 48 hours, the measures against Mexico and Canada were paused, leaving US businesses, economists, and trading partners wondering whether, for all his bluster, market sentiment could be a brake on the president’s ambition.
That tariffs are costly, disruptive and divisive is not in question.
Faced with huge price rises, importers have two choices: to absorb the additional cost by cutting profit margins, investment and ultimately growth, or pass them on to customers, increasing prices.
The impact was broad and immediate, sowing confusion and chaos.
The US car industry and its suppliers saw three changes to trading arrangements in 48 hours; executives of major retailers including the giant Target warned of price increases; while three north-eastern US states faced soaring energy bills as a result of counter-tariffs from Ontario that threatened supply.
Unclear motivation
What is less clear is whether Trump’s motivation is economic or political.
Treasury secretary Scott Bessent suggested on Friday it is both.
In an interview with CNBC, he said the tariffs were intended to address America’s fentanyl crisis, providing leverage to persuade Canada and Mexico to tackle cross-border smuggling, and China to curb the flow of precursor chemicals.
But Mr Bessent also insisted the Trump program will require consumers to “detox” from government support while they wait for the private sector to provide the jobs and wage growth required to outpace inflation.
That sounds like a more fundamental reset, one in which the value of the dollar, falling all week, is less of a priority.
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For the president and some of those close to him, tariffs are ideological.
Their protectionist argument is that cheap imported consumer goods have hollowed out American manufacturing, with the resulting trade deficits amounting to a tax on American jobs.
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Imposing tariffs runs the theory, discourages imports and encourages manufacturing at home.
But that is a long-term correction, with the short-term cost borne by American companies and consumers and, in turn, a global economy that still orbits around the US.
There will be further tests in the coming weeks, with the White House due to announce a global reciprocal tariff regime, including the EU and UK, on 2 April.
By then we may have a better sense of whether Mr Trump’s popularity, and his ego, can withstand a market downturn, rising prices, and the criticism that would come with them.
US
Sean ‘Diddy’ Combs’s ex Cassie gives birth two weeks after testifying against him – as his bid for mistrial is dismissed
Sean ‘Diddy’ Combs’s ex-partner has given birth two weeks after testifying against him – as his legal team failed in a bid to declare a mistrial.
Cassie Ventura gave birth to her third child with partner Alex Fine after going into labour on Tuesday, a close source told Sky’s US partner network NBC News on Wednesday.
The news was later confirmed by her friend and former stylist Deonte Nash, who told Diddy‘s trial that he last spoke to her “after she had the baby yesterday [Tuesday]”.
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Combs, 55, is accused of two counts of sex trafficking by force, fraud, or coercion, two counts of transportation to engage in prostitution, and one of conspiring to racketeer. He denies all the charges.
Cassie had given evidence while she was more than eight months pregnant. The 38-year-old told the trial that Diddy subjected her to physical, sexual and mental abuse for much of their 11-year relationship.
She alleged he forced her into “hundreds” of drug-fuelled sex sessions with male escorts while he watched, which he referred to as “freak offs”.
News of the birth came on the same day Combs’s legal team tried in vain to get the judge to declare a mistrial.
Sean ‘Diddy’ Combs depicted in a court sketch on Wednesday. Pic: Reuters
Diddy and Cassie at an event in 2016. Pic: zz/JMA/STAR MAX/IPx/AP
Alexandra Shapiro, one of Diddy’s attorneys, moved for the mistrial just before the court broke for lunch, during evidence by Los Angeles Fire Department (LAFD) arson investigator Lance Jiminez.
According to Ms Shapiro, Mr Jiminez’s claim that police destroyed fingerprint evidence collected at the scene of an alleged 2012 Molotov cocktail attack on rapper Kid Cudi’s car would lead the jury to believe Combs had something to do with it.
She accused the prosecution of “misconduct” and claimed their questioning of Mr Jiminez was “designed to play into that” narrative.
Another of Diddy’s defence lawyers Marc Agnifilo described the prosecution’s conduct as “outrageous”.
However, prosecution attorney Christy Slavik hit back by saying a mistrial was “completely unwarranted”.
She insisted questions about the destruction of evidence were asked to highlight the poor quality of the police investigation.
Judge Arun Subramanian dismissed the motion and instead told jurors to disregard any reference to the fingerprints.
Earlier on Wednesday, Los Angeles Police Department (LAPD) officer Chris Ignacio detailed the alleged break-in at Kid Cudi’s home in December 2011.
LAPD officer Chris Igancio is questioned by Diddy’s attorney on Wednesday. Pic: Reuters
He was called to the scene and noticed a Cadillac Escalade parked in front of the property, the number plate for which later transpired to be registered to Bad Boy Productions, Diddy’s record label.
During his evidence, Cudi alleged it was Diddy who was behind the break-in.
Rapper Kid Cudi outside court last week. Pic: AP
Mr Jiminez then testified about an alleged Molotov cocktail attack on Cudi’s car the following month.
Having investigated the incident, he concluded it was “not a random act” and that the makeshift firebomb had been placed there deliberately, in line with Cudi’s claims.
LA arson investigator Lance Jiminez is questioned in court. Pic: Reuters
When Diddy and Cassie’s former stylist Mr Nash took to the stand, he detailed several incidents of alleged violence inflicted on the singer by her then partner.
On one occasion, Diddy turned up at her LA flat, “grabbed her by the hair”, “kicked her” and “hit her pretty hard”, he claimed.
A court sketch of Deonte Nash, a former stylist to Sean Combs and Cassie Ventura. Pic: Reuters
When she hit her head on a bed frame, she suffered a gash to her forehead and eyebrow, he said.
Both he and Mia, a second alleged witness, jumped on the rapper’s back to get him to stop, he told the court.
Following another incident when Diddy demanded to see Cassie, she threatened to “go over the balcony”, Mr Nash told the jury.
Diddy was violent towards him too, he said, once choking him against a car and threatening him not to go out with Cassie and without him.
Despite all this, Mr Nash said he “doesn’t hate” Diddy – and that he had been compelled to give evidence as part of a subpoena.
Mia, which is a pseudonym used to protect her identity, was due to start her evidence on Wednesday but Mr Nash’s testimony overran.
He will resume giving evidence on Thursday, with Mia’s evidence due to last until the court breaks for the weekend.
The trial continues.
US
US trade court blocks Donald Trump from imposing sweeping global tariffs – claiming he ‘exceeded his authority’
The Trump administration has stopped the scheduling of new visa interviews for foreign students hoping to study in the US while it prepares to expand social media vetting of applicants.
A US official said on Tuesday the suspension is intended to be temporary and does not apply to applicants who already have visa interviews scheduled.
The official spoke on the condition of anonymity to discuss an internal administration document.
A downturn in enrolment of international students could hurt university budgets in the US.
To make up for cuts in federal research funding, some colleges previously shifted to enrolling more international students, who often pay full tuition.
Now, an internal cable signed by US Secretary of State Marco Rubio and seen by the Associated Press news agency shows how new student visa interviews are being halted as the US State Department plans to issue guidance on expanded social media vetting.
The cable says that “in preparation for an expansion of required social media screening and vetting, consulate sections should not add any additional student or exchange visitor visa appointment capacity” until the guidance is issued.
It also says the halting of new visa interviews is “effective immediately”.
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Asked about the suspension at a briefing on Tuesday, State Department spokesperson Tammy Bruce said the US uses every available resource to vet people applying for visas.
“We will continue to use every tool we can to assess who it is that’s coming here, whether they are students or otherwise,” Ms Bruce said.
The move, first reported by Politico, is the latest in the White House’s crackdown on international students.
Last week, the Trump administration revoked Harvard University’s ability to enrol international students, removing the college from the programme that allows schools to sponsor foreign students for visas.
That effort was quickly challenged in court and for now is blocked by a federal judge.
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This spring the Trump administration also revoked the legal status of thousands of international students already in the country, leading some to leave the US out of fear of deportation.
After many students filed successful legal challenges, the administration said it was restoring the students’ legal status.
But the government also expanded the grounds for terminating international students’ legal status going forward.
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US President Donald Trump’s previous administration stepped up scrutiny of all visa applicants, introducing reviews of their social media accounts.
The policy remained during President Joe Biden’s administration.
An extended pause in scheduling student visas could lead to delays that may disrupt college, boarding school or exchange students’ plans to enrol in summer and autumn terms.
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