讀後心得

After President Trump announced new tariff measures on the 2nd, the Chinese government immediately responded on the 4th, deciding to impose a 34% tariff on all American goods starting from the 10th. This move led to a significant drop in global stock markets for two consecutive days, resulting in a record loss of 6.6 trillion yuan. The Nasdaq index decreased by 22% from its peak last year, entering a bear market. Federal Reserve Chairman Powell stated that the impact of the tariffs exceeded expectations and could exacerbate inflation and economic slowdown, further putting pressure on the stock market. The Dow Jones Industrial Average, S&P 500 index, and Nasdaq index all fell significantly, reflecting investors' concerns about the impact of the trade war. Although the March employment report showed an increase of 228,000 jobs, it could not soothe market sentiment. Powell emphasized that the effects of the tariffs remain unclear, and the Fed will continue to observe, possibly not lowering interest rates in the short term.

After President Trump announced the tariff measures on the afternoon of the 2nd, the Chinese government decided to retaliate strongly on the 4th, announcing a 34% tariff on all American imports starting from the 10th. As the global trade war cannot be swiftly resolved, the stock market fell for two consecutive days, with market losses soaring to a record 6.6 trillion yuan. The Nasdaq index declined by 22% from its historic peak set in December last year, officially entering a bear market for tech stocks.

The Federal Reserve Chairman stated that the impact of tariffs and their effects on the economy and inflation "far exceeded expectations," and that the U.S. economy faces risks of rising inflation and slowing growth. These remarks further dampened the stock market. Trump also urged the Chairman on his social media platform to cut interest rates, pointing out that with inflation and energy prices falling, this is the best time to lower rates.

On the 4th, the S&P 500 index fell by 6%, the Nasdaq index dropped by 5.8%, and the Dow Jones Industrial Average fell by 2,231 points. The massive sell-off in the stock market indicates that investors have begun to realize that extremely high tariffs and their retaliatory measures are unlikely to improve the global economy or corporate profit outlook, with severe consequences from the stalemate of the trade war. This has been the worst week for the stock market since 2020, with the Dow Industrial Average plunging more than 3,000 points, a drop of 7.9%, entering correction territory. The Nasdaq has entered a bear market, while the S&P 500 has shrunk by 9.1%.

The latest employment report shows that the U.S. economy added 228,000 jobs in March, but the prior uncertainty around tariffs does not seem to have disrupted the labor market yet. Although the employment report was unexpectedly strong, it did not provide much comfort to investors. Analysts have raised the probability of a global economic recession to 60%.

The Secretary of State acknowledged that "the market is collapsing," but stated that the economy is not in free fall and that global businesses will adapt to the new environment. The Chairman mentioned in a meeting that import taxes may "at least lead to a temporary increase in inflation," and emphasized the need to ensure that one-time price increases do not evolve into a persistent inflation problem. He noted that the Federal Reserve may keep the benchmark interest rate unchanged at around 4.3% over the next few months to lower borrowing costs, slow economic growth, and curb inflation.

The Chairman stressed that the overall impact of tariffs on the economy remains unclear, and the Federal Reserve will remain cautious until the economic situation becomes more clear. He also mentioned that many businesses have indicated they will temporarily halt new investments until they better understand the impact of tariffs. He stated that choosing to wait and observe seems to be the right approach during this uncertain time. His description of the impact of tariffs is more negative than in March, when he had suggested that inflation caused by tariffs might be temporary.

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