Whether the Chinese are negotiating or not, Boeing planes are already being sent back, and small-value parcels from Shein are already costing US consumers 377% more. Meanwhile, Spain, rather than US farmers, has received orders for 12 million tonnes of pork.
As Trump backpedals by exempting iPhones and other consumer electronics, the damage has already been done. Tesla sales and shares are plummeting, forcing Elon Musk to cut back on his time spent Doge-ing. Tourists are staying away from the US, directly hurting 12 million jobs, versus 11 million in manufacturing. With every bid to land grab or renege on free trade agreements, decades of US soft power are further undermined among foes, and even more so with friends.
Despite American pressure, the Europeans and Japanese have declared that they will not join the US fight against China. Perhaps the lure of a rules-based multilateral world order, and not just Xi Jinping's charm or harm in the face of a bullying friend, requires them to keep some insurance, by even exploring Chinese tech, which was once non-grata due to security reasons.
Buyers' remorse?
The American consumer is in pain as Walmart kicks off a 5% to 10% price increase from extra inventory only just shipped in 1Q pre-emptively in anticipation of tariffs. Egg prices - a politicised symbol of inflation - hit all-time highs in America in April. Port workers and American truck drivers will see their hours drop as imports from China shrink.
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Even if Apple shifts production of US-bound iPhones to India by 2026, giving Trump some leverage in negotiations with China, it will not bring manufacturing jobs back to the United States. Promises of building plants in America will take time, but investment plans are stalled as companies trying to operate in US cannot be certain of the supply of rare earths and materials and parts at a non-tariffed cost and at a price the American consumer can bear, much less export to any other country as it will simply not be competitive.
True, the US may not need Canadian lumber as National Parks are de-protected by Trump, or marine sanctuaries are open for drilling. Trumpian policies are designed to disregard environmental, social, and governance (ESG) factors, not just diversity, equity, and inclusion (DEI), and success has been claimed for lowering energy prices by "historical proportions" - a mild exaggeration. Oil prices and gasoline have dropped, not because of increased drilling, but because markets are worried about a recession.
What will be lost to the world, however, is climate data from the US, which will make it harder for insurers to price, leaving events like California fires subject to state insurance or a thinning market for catastrophic insurance. Still, this is just the beginning. As the uncommitted movement that cost Kamala Harris some key swing states because of former US President Joe Biden's policies on Gaza has come to realise, the Trump alternative (surprise...) has gone much further, emboldening Israel.
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For the peace lovers who expected wars to be solved by Trump in 24 hours, the administration seems to be losing steam and interest with both Ukraine and Russia. The art of the deal in laying out the red carpet to Russia, including having the US vote together with Russia, North Korea and Iran at the UN, has not yielded much with Trump issuing a frustrated "Vladimir STOP" tweet after yet another bombing of civilians. Instead of new resolve, Trump appears tired, most exemplified by his sleepy face at Pope Francis's funeral last weekend. An irony considering his label of Biden as "Sleepy Joe".
Trump's MAGA base may still, according to polls, be 90% in support of their champion, who has an excuse or a narrative for all the pain they are bearing with loss of jobs, income and higher prices. It is a "necessary cleansing" that has been the refrain for the hard core - perhaps the Proud Boys pardoned for the "beautiful" January insurrection.
However, among the neutrals and swing voters, pockets of regret after the facts are starting to surface as Republican investors watch their 401K savings shrink, and wealthy Republican sponsors, companies and hedge fund managers find it impossible to manage where policy changes on the fly with financial implications on their bottom lines. More and more are speaking out, even some who have bent the knee at Trump's inauguration just over three months ago.
And Trump has won once again. First in 2016 - the lowest rating after 100 days nationally for an American President, well below George W. Bush, Barack Obama and even Biden. This time, Trump's 41% even beat his record low. Unfortunately, after the vote is done, Americans have to live with the consequences. Even more tragically, so too have the rest of us.
Market discipline
Although the April 9 tariff reversals were touted as a living example of the art of the deal in action, or an incredible still unproven exercise in insider trading, it is quite likely that Scott Bessent, the US Treasury Secretary, has temporarily become the adult in the room. As US Treasuries were sold off raising the cost of borrowing precipitously for the US government, and the greenback fell, Bessent has gained more prominence as trade hawks including Peter Navarro - labeled a "moron" by Elon Musk - have taken a back seat.
Jamieson Greer, Trump's top trade negotiator, had his credibility tarnished while defending the line in the Senate even as his boss announced a partial U turn. Commerce Secretary Howard Lutnick has been making sure he defers to his boss holding the line on its 10% baseline tariff even as Singapore's Deputy Prime Minister Gan Kim Yong noted that bilateral trade and Singapore investments support around 350,000 American jobs and the US has a consistent trade surplus with Singapore, which amounted to US$30 billion in 2024.
Global markets had mainly recovered after the tariffs were unleashed, but the US markets continued to suffer whipsaws. Trump's impatience with Fed chairman Jerome Powell for not immediately lowering interest rates to help cushion the slowdown. Another precipitous rout was triggered after speculation that Powell would be unseated before his term ends, thereby eroding the Fed's independence to fight inflation (and potentially stagflation). When Trump U-turned again to declare support for Powell, there was a mild relief rally.
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Even so, the damage done may be irreparable. US stock markets appear to be set for the worst April performance for almost 100 years. Neither the S&P nor the Nasdaq has recovered its 200-day moving average following the sharp gaps, down days, and extreme volatility. Some technical chartists have identified extreme bearish death crosses on charts. More concerning, however, is the value of the dollar, which has only headed one way - down. Unlike in other past financial market crises, it is not a flight to safety.
Bridgewater Associates, the world's biggest hedge fund, issued a warning in their latest newsletter on a seismic global shift. A transition to a "new macroeconomic and geopolitical paradigm" of "modern mercantilism" from globalisation and free trade. Ray Dalio, its founder, pointed out separately that the global monetary order is breaking down.
With economic blocs and countries not just living in small gardens requiring high fences but having to take care of themselves and their companies, capital flight or repatriation from the US, as suggested by Chew on This last month, has already begun for European investors. We may want to give more thought to whether the $5 billion shot in the arm recommendation by the Equity Markets Review Committee, which is yet to be implemented, does need a further annual short in the arm as recommended in Issue 1180's The $5 bil for market revival: Money No Enough?
With US Treasuries no longer perceived as risk-free, more capital will flow out of the US. China's outsized purchase of gold in the first quarter of this year tells a story. Even after a 5% pull back from the record of US$3,500 per ounce with equity markets rebounding, I too may be tempted to use my 10% gold limit under the CPF investment scheme to allocate some to the SPDR GLD ETF on SGX, on pull backs which have been shallower than the US$3,000 breakout recently.
Count blessings
Thus far, having sojourned in Oman for the first half of April, and not reacted to short term market movements, with a predominant allocation to Singapore equities and REITs, I am relieved to be just off by a couple of percentage points across my portfolio, even though there is implied China and some local tech exposure embedded.
My portfolio has performed slightly better than the Straits Times Index (STI), which is also only about 4% off its high, and has comfortably regained its 200-day moving average, now above 3,680 points. April's market madness has shown that the STI may have decoupled from the US, perhaps due to the relative valuation excesses in the West and the value still to be discovered here.
True, there may have been some market relief on Nomination Day on April 23, as it may be unlikely for the ruling People's Action Party not to form the government. However, if everyone is sanguine that the show will go on as is, and we can use our vote to express mild annoyance over this or that, it's worthwhile to be reminded of what one wishes for. Hearing from now regretful Trump voters, we in Singapore may not want to mistake sophistry for sophistication, good looks for intelligence, and rhetoric and bravado for competence. I know how I am voting.
Chew Sutat retired from the Singapore Exchangeafter 14 years as a member of its executive management team. During his watch, the exchange transformed from an Asian gateway into a global multi-asset exchange. He was awarded FOW's Lifetime Achievement Award. He serves as chairman of the Community Chest Singapore
