Tariffs, Trump, Inflation, and Market Crashes: What’s Going On?

So, I’m not sure if anyone’s noticed (if you haven’t, where have you been?!), but President Trump has just decided to slap trade tariffs on, well, pretty much the entire world.

Last week, the US President announced sweeping 10% tariffs on all countries. On top of that, he singled out a few nations for even steeper tariffs—specifically those he believes are selling way more to the US than they’re buying.

During what he dubbed “Liberation Day,” Trump unveiled his grand tariff plan with some not-so-fancy math. Vietnam, for example, now faces a whopping 46% tariff on its exports to the US. China? An additional 34% tariff—on top of the existing 20%—bringing the total to a staggering 54%.

So, with President Trump spreading the love of tariffs around the world, it wasn’t a huge shock to see stock markets get hammered for 3 days straight. The S&P 500 Index in the US has lost over 10% in the past 3 trading days. 

Meanwhile, here in Singapore, the Straits Times Index has lost over 12% over the last 5 trading days. 

This brings us to the big questions: What do these tariffs mean? Why are the stock markets in panic mode? And how is Singapore’s market holding up?

 

The big, bad FUD Man

These days, it feels like everything gets summed up in an acronym—whether it’s FOMO (Fear of Missing Out) or FUD (Fear, Uncertainty, Doubt). In this case, it’s the latter: pure, unfiltered FUD.

Whenever markets are gripped by FUD, we tend to see a lot of red. That’s because if there’s one thing financial markets really hate, it’s uncertainty.

And what causes uncertainty? Well, Trump is a natural at that because no one—and I mean no one—has any idea what he’s going to announce next, not even his closest advisers. 

One of the biggest reasons for the recent market nosedive is that President Trump has become the ultimate “FUD Man.” Many analysts were expecting a few targeted tariff measures on Liberation Day. Instead, they got a full-blown shock to the global trading system.

In other words, investors everywhere are going into “sell now, ask questions later” mode. Why? Because tariffs are essentially a tax on US consumers—and when the US, the world’s biggest consumer economy, starts slowing down, it’s bad news for everyone.

 

Recession fears

This brings us to the next point. Sure, there’s plenty of in-depth material out there about international trade policy and the long-term effects of widespread tariffs on globalisation (yawn), but the more immediate concern is economic growth.

For those of us concerned about growth, these tariffs are not good news. While the initial shock of the tariffs sent markets into a tailspin, the reassessment of corporate earnings (i.e. company profits) means that many investors now expect US companies to earn significantly less money in the months and years ahead.

Why? Because when you slap 50%+ tariffs on consumer goods, prices go up. And when prices go up, consumers tend to spend less. That slowdown in spending? It’s a recipe for weaker economic growth.

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ALSO READ: What is the Global Market Sell-Off and What Does It Mean for Singaporeans?

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Interest rate cuts ahead for us?

We all know that when it comes to the US economy, one of the key players pulling the strings is the country’s central bank—the US Federal Reserve (aka the Fed). Back in March 2025, the Fed projected it would cut interest rates by 0.5% by the end of 2025—likely in the form of 2 0.25% cuts.

But that was before President Trump dropped his tariff bombshell on the world.

Now, many market strategists are expecting the Fed to slash interest rates by up to 4 times in 2025, or up to 1%. Why?  Because if these tariffs stay in place, a recession in the US is starting to look more likely, and rate cuts are one of the Fed’s tools to stimulate the economy. However, the formula isn’t that simple.

From the sidelines, it’s tempting to assume the Fed will just swoop in heroically and save the day with lower rates. The catch? Inflation in the US is still running above average. And unless we see a full-blown economic meltdown, the Fed might just stick to its original plan of 2 rate cuts.

 

What about Singapore’s stock market?

For Singapore, the initial fallout seemed fairly limited on the first trading day after the tariff announcement. That’s because we got off relatively lightly, facing “just” a 10% tariff (yay, we’re special!)—which is a lot better than what many other Asian countries had to stomach.

But the real impact started to show last Friday and especially on Monday (7 April), when market sentiment took a serious hit. All the major banks saw their stocks take a beating—DBS, for instance, plunged over 8%, which is massive for a blue-chip stock.

Furthermore, many electronics and industrials firms, as well as Singapore REITs, saw their share prices fall close to 10%. Overall, the benchmark Straits Times Index plunged by 7.5%, marking its worst single-day drop since October 2008—yep, the Global Financial Crisis era.

Ok, so that’s not a great sign for the market or investors here. These tariffs are expected to hit Asia hard. Many exporters across Southeast and North Asia have been slapped with steep tariffs by President Trump. And if US companies start cutting back on orders, that means slower growth across the region. That’s bad news not just for us but for global markets too.

 

Where do we go from here for investors?

Understandably, this isn’t exactly a good time to be an investor, given how much value has evaporated in stock markets in the past few days. The full unpredictability of President Trump was on display on Monday, when the S&P 500 Index swung wildly—within a range of nearly 8%—thanks to a flurry of rumours.

First, there was a news leak that the White House was considering a “pause” on all tariffs, causing the main stock market index to jump nearly 5%. Yet that was dismissed as “fake news” by President Trump and his team shortly after, meaning the S&P 500 Index fell back down sharply.

During the day on Monday, the market swung between gains and losses—highlighting that this FUD effect is basically on steroids right now with President Trump. 

To top it off, he also threatened an additional 50% tariff on China—bringing the total to a jaw-dropping 104%—unless China dropped its retaliatory tariffs announced last Friday.

With things changing so fast, it’s hard to know what the “right” move is. For many investors, sticking with broad-based global stock market ETFs has been one way to ride out the uncertainty and stay focused on long-term goals. Because honestly? No one—not even President Trump, it seems—knows what’s coming next.

 

Enjoyed this read? Stay in the loop with all the latest happenings in Singapore this week here. 

 

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About the author

Tim has spent over 15 years in the finance industry as an investment communications specialist with the likes of Schroders, The Motley Fool, and CGS International. He’s passionate about helping people take control of their finances by building wealth through long-term investing and thinking more coherently on all things “money”. He loves breaking down complex financial topics into content that’s informative and, most importantly, engaging.