Trump may not have intended it, but a global economic "reset" has arrived.

Source: Jin10

In recent years, discussions about a “reset” of the global economy have been incessant. However, what the United States is currently witnessing may differ greatly from previous expectations, but it is certain that the global economic “reset” has indeed arrived. Establishing today’s global supply chain has involved the investment of trillions of dollars.

The United States cannot reverse decades of investment and build a brand new supply chain overnight. For example, building a manufacturing facility for computer chips requires an investment of about $10 billion, and the construction period can take as long as 3 to 5 years. Therefore, any idea that the United States can simply press the “reset button” to make everything better is too unrealistic.

The United States has just experienced the largest tariff hike in history. Many companies that had previously invested heavily in building global supply chains to gain a competitive advantage are now facing business setbacks. Wall Street clearly was not prepared for the moment when the “reset button” was pressed. Currently, investors’ mentality is “sell first, talk later.” The tariff hike has brought a strong impact to the global financial market, raising concerns about a potential economic recession in the world’s largest consumer market and significant price increases across various industries.

Michael Arone, an investment expert at State Street Global Advisors, stated, “The Trump administration may be playing a game of ‘chicken’ with trade partners, but market participants are not willing to sit and wait for the outcome.”

Many people hope that President Trump will change his mind after witnessing everything happening on Wall Street, but the message coming from the U.S. is that this change will not happen. Officials in the Trump administration stated on Sunday’s talk shows that these tariffs will be strictly enforced, with no room for negotiation. “The tariffs are about to take effect. The President has announced this decision, and he is not joking. The tariffs are about to take effect, and they will certainly take effect,” said Commerce Secretary Ross on CBS’s “Face the Nation.”

Get ready for some jaw-dropping price increases. For example, the price of the iPhone could soon rise by hundreds of dollars. If companies pass on tariff costs to consumers, American consumers may find that their favorite electronic products, including the iPhone, will see significant price hikes. Despite Apple’s efforts to expand its supply chain, the vast majority of iPhones are still produced in China. According to predictions by Rosenblatt Securities analysts, the starting price of the iPhone 16, which is $799 in the U.S., could soar to $1,142 for the base model, marking an increase of up to 43%. This would have a devastating impact on the standard of living in the United States.

After Trump announced a radical tariff stance, JPMorgan’s economic team has raised the probability of a recession to 60%. In a report titled “Blood Rain is Coming,” JPMorgan’s chief economist Bruce Kasman and his team pointed out that this year’s 22 percentage point increase in tariffs is the largest tax shock since 1968. The United States cannot possibly pass through this crisis unscathed.

Since the 1990s, the apparel and footwear manufacturing industries have fully shifted overseas. As Swartz explains, sports brand companies have particularly invested billions of dollars in building roads, ports, factories, and railways, which form a complex supply chain supporting Vietnam’s infrastructure. Keeping these factories operational serves the interests of all parties involved: the Vietnamese economy relies on these businesses, and companies depend on Vietnam to produce goods.

These tariffs will create winners and also produce losers. Many once-prosperous businesses will suddenly find themselves in trouble. The United States is being warned that “a new wave of corporate defaults” is about to arrive. **

The global trade war initiated by Trump has laid the groundwork for a new round of corporate defaults in the financial markets. The global bad debt index compiled by Bloomberg News has recorded its largest increase in at least 15 months this week, with over $43 billion in bonds and loans at levels difficult to refinance.

Although Trump had repeatedly signaled the imposition of tariffs before officially announcing it on April 2, almost no one anticipated that Washington would impose such high tariffs on so many major trading partners—especially considering that this move could disrupt the global supply chains that the entire U.S. industry relies on.

Some Trump supporters speculate that Trump is deliberately disrupting the global economy and triggering a financial market crash. In fact, Trump himself shared a video on TruthSocial last Friday discussing the theory. But Hassett, director of the White House National Economic Council, said on ABC’s “This Week” on Sunday: “The stock market crash is not a deliberate strategy of Trump. The video, which originally appeared on TikTok in March and was retweeted by Trump two days after the tariffs were announced, claimed that “Trump deliberately sent the stock market down 20% this month, a move that could make you rich,” explaining that it could “force money into Treasuries, pushing the Federal Reserve to cut interest rates aggressively in May, while weakening the dollar and driving down mortgage rates.” It was a risky move, but it worked.”

The developments will be highly dramatic. By significantly raising tariffs, the United States is essentially implementing “economic bloodletting” on its citizens. The government will receive more revenue, while the standard of living in the U.S. will decline significantly, and economic activity will slow down considerably. If the U.S. does not change course, this story is destined for a bleak ending.