The 10% Baseline: Unpacking Trump’s Sweeping Tariff Plan
& TikTok Deadline Approaches
Just in case you’ve been living under a rock, President Donald Trump on 4/2/2025 announced a shocking tariff policy that has essentially shaken the whole world.
The Nasdaq 100 at its low on 4/3/2025 was down almost 6% due to the implications, with names like AAPL 0.00%↑ down over 10%, NKE 0.00%↑ down over 13% and NVDA 0.00%↑ down over 6%.
TikTok is quickly approaching its deadline to divest or face a ban in the US. AMZN 0.00%↑ and APP 0.00%↑ have both now officially placed bids to acquire parts if not all of TikTok. This is interesting because despite TikTok having their own shop for e-commerce, a lot of users on the app send viewers to Amazon for purchasing products. TikTok has been firm that they are not for sale as the Chinese government would likely block the deal. Given the tariffs that Trump has enacted, this is probably ever more likely if a deal ever is potentially struck.
Let’s take a look at what’s happening.
The intent of the tariffs was to match or exceed tariff rates that other countries have imposed on the US. This is why all the rates are different depending on which country is in discussion.
The tariff policy starts with a universal base tariff of 10% on all imported goods and then “reciprocal” tariffs on over 60 countries. Interestingly, the Falkland Islands in Antarctica is getting a 42% tariff rate despite no inhabitants. The tariffs also include allies like Japan and South Korea with tariffs rates being 24% and 26%, respectively.
The market and economy fear is that these tariffs will stoke inflation and raise costs of goods in America. Imported goods into the US will inherently become more expensive because of these tariffs. This also isn’t considering the fact that other countries may retaliate by raising tariffs on US exports and thus we have a trade war. The cost implication for US businesses that rely heavily on foreign parts will likely be drastic. This is why you see names like NKE 0.00%↑ get hit the hardest in the stock market. A large part of Nike products come from Vietnam, which just got hit with a 46% tariff rate.
These tariffs are meant to lead to negotiations on lowering tariff rates for US exports. Here’s an interesting perspective: these tariffs are pressuring countries to drop their tariffs on US goods to 0%. This will in effect stimulate more US good production as US goods now have a new market. They are able to make more and potentially profit more in the other country because there isn’t a tariff rate anymore.
What does this mean for us?
I think if we commonfolk think too hard about macro topics like tariffs and how it effects the US and global economy, it can become really overwhelming. The first thing to do is to take a deeeeep breath. In all honesty, if long term is your only concern, these large dips in the stock market are nice discounts. Not trying to time the bottom, nor am I saying to full port into longs at this very moment. I think it’s important to buy financial names that capture the whole market more than individual names: VOO 0.00%↑ and QQQ 0.00%↑ etc. You don’t want to be stuck in a large position of an individual name that is more effected than others from the tariff trade war like NKE 0.00%↑.
Personally, I’ve added into VOO 0.00%↑ and QQQ 0.00%↑ and I am prepared to add more should we continue lower. Given this news driven market, it’s ever more apparent that trying to time the bottom is ill advised.