Ten days after ‘liberation day’, many Australians are still wondering: what just happened to global markets?
By the time Australians woke Wednesday morning, 3 April, the world had changed,In a single stroke of his pen, a former reality TV star, property mogul and now second-term president of the most powerful country in the world had undone a century of US trade liberalisation,As global financial markets shed trillions in dollars of value, Australians compulsively check their superannuation balances to see how much damage Donald Trump’s trade war is inflicting on their retirement savings,Even the treasurer is losing sleep,“I do wake up in the middle of the night and read the Wall Street Journal updates on the American market, I confess to that,” Jim Chalmers told ABC radio on Friday morning.
Somehow along the way, we had once again been lulled into taking Trump seriously, but not literally.Instead, as the CBA’s chief economist, Luke Yeaman, said in the wake of an historic week, “the era of trade liberalisation, free market reforms, deregulation and fiscal discipline – the Washington Consensus – is officially dead and buried”.On 2 April in Washington DC – or “liberation day”, as Trump calls it – the president unveiled a plan to put tariffs of 10% on imported goods from countries around the world.That was bad enough, but there was worse to come.Every country which sold more to the US than it bought (that is, who had a trade surplus with the US) would be further punished with a “reciprocal tariff”, that came into effect on 9 April.
Sign up for the Afternoon Update: Election 2025 email newsletterThe higher tariffs were crudely formulated based on the size of America’s trade deficit.It was an amateurish approach, roundly condemned by economists and trade experts.It led to perverse outcomes such as obscure and unpopulated islands being whacked with trade sanctions.Australia, which has a trade deficit with the US (we buy more stuff than we sell), escaped with the relatively low – in a world of vastly changed expectations – tariff rate of 10%.Others were less fortunate.
Goods from the EU were hit with an import duty of 20%, and Japanese goods 24%,China was hit with tariffs of 34% – which came on top of the 20% existing rate,China imposed its own tariffs of 84% on US imported goods – and again to 125% on Friday,By then, in a series of tit-for-tat retaliations, America’s tariff on Chinese goods had reached an unbelievable 145% – raising the prospect that trade between the world’s two economic giants will simply disappear,Australia ships less than 5% of the total value of exports to the US.
Experts say we should be shielded from the fallout from a global trade war – a recession is not on the cards – but we are not immune,The Reserve Bank is expected to cut rates when it next meets on 19-20, even as the RBA governor, Michele Bullock, pushes back against calls for more aggressive policy easing,Instead, economists say the US will be the biggest loser from its trade aggression,Tariffs are a tax on imports and will raise the prices of goods for everyday Americans, costing an average of $US4,700 in 2024, according to estimates by The Budget Lab,Americans will be paying 64% more for clothing in the short run, while prices for electric equipment will be 46% higher, and car prices 12% higher.
As was widely reported, JP Morgan said there was a 60% chance the trade shock would drive the US into recession.Trump assured the world that “I know what the hell I’m doing”, but investors around the world were panicking.And within 12 hours of the reciprocal tariffs coming into effect on 9 April, Trump had reversed course.He paused them for 90 days (with the notable exception of China), which he said would give countries the chance to come and do a deal.But what really changed Trump’s mind?On 2 April, Trump declared that his tariffs would “make American wealthy again”.
But a week later, when the higher duties came into effect, it was clear that Americans were suddenly and substantially less wealthy.Sign up to Afternoon Update: Election 2025Our Australian afternoon update breaks down the key election campaign stories of the day, telling you what’s happening and why it mattersafter newsletter promotionMajor Wall Street stocks, such as Apple, started trading like unstable penny stocks, shedding billions of dollars in value in the immediate aftermath over concerns their entire production model would unravel.Some traders described it as “obliteration day”.Global markets, including in Australia, followed the US lead and a tumultuous period ensued.By 8 April, shares on Wall Street had plummeted by 12% over four tempestuous days of trading.
If the US share market is, as economist Justin Wolfers calls it, “a bet on the future of the American economy”, then things were looking grim indeed,The chief investment officer at Sydney-headquartered Opal Capital Management, Omkar Joshi, said the uncertainty is unnerving,“No one really knows what’s going to happen next, there’s so much headline risk,” Joshi said,Those headlines were coming from Trump himself, as his posts on his Truth Social platform sparked dramatic market moves,“THIS IS A GREAT TIME TO BUY!!! DJT,” Trump wrote on Wednesday morning, 9 April, US time.
Hours later, Trump announced the pause.The US’ chief benchmark, the S&P 500, closed up 9.5% that day, gaining about US$4tn, regaining more than two-thirds of the value it had lost over the previous four trading days.It was one of the biggest rises since the second world war.Australia’s benchmark S&P/ASX 200 caught some of the exuberance, closing up 4.
5% to record its strongest trading day since the pandemic,Days earlier it had also recorded its steepest one-day fall since the pandemic,The Australian dollar, which threatened to plunge below US59c earlier this week, had spiked above US62c on Friday,Despite the rebound, after eight days of chaotic trading, the S&P/ASX 200 was down about 4%, taking the benchmark back to levels reached mid last year,“Equities probably do go lower from here, but you’re also going to see some massive rallies along the way.
It’s not just going to be one way down or one way up,” Oshi says,Meanwhile, something curious is happening outside equities,Traders have also been selling the American dollar, a counterintuitive move given money tends to flow into the greenback during volatile times,AMP’s chief economist, Shane Oliver, says the panic in the bond market reflected investors losing faith in American assets as the ultimate safe port of call in a storm,“It has an echo of Liz Truss,” Oliver says, referring to when a meltdown in British bonds forced the former UK prime minister to cancel plans for major tax cuts.
“But it’s not just that,I don’t think Truss destroyed confidence in [her] government like Trump has [in his],”It was this spectre of a bond market revolt – or in other words, the threat to a hugely indebted country from a big rise in borrowing costs – that eventually appeared to convince Trump to press pause on his reciprocal tariffs,Asked to explain, Trump told reporters: “Well, I thought that people were jumping a little bit out of line”,“They were getting yippy, you know, they were getting a little bit yippy, a little bit afraid.
”But with the US president determined to reshape the global trading system, whatever the cost, the yips are here to stay.
Mitchell hails ‘ruthless’ England’s second-half display in Ireland win
John Mitchell says his side “put themselves through the washing machine” in a difficult first half against Ireland in the Women’s Six Nations on Saturday. England were held scoreless until the 34th minute and only held a slender 7-5 lead at half-time. In 2024 the Red Roses led Ireland 38-3 at the break.In the second half in Cork England shifted through the gears and they blew their opposition away to extend their winning run in the Six Nations to 32 games.The head coach thought the second-half performance was outstanding, saying: “The girls are really good at resolving issues
‘Gout-mania’ expected in Perth but rival Kennedy could miss finale
The national athletics championships come to a crescendo on Sunday in Perth and a virtuoso display is expected from 17-year-old phenomenon Gout Gout, who will look to break the 20-second mark and better his own national record in his preferred event.The 2025 Australian championships – dubbed by insiders as Gout-mania – are the first since the teenager’s emergence as a global athletics celebrity, and the afternoon’s 200m heats and final are likely to be the last chance local fans will get to see him chase track records until after he graduates from year 12 later this year.But the sprint star may have to perform without his rival Lachie Kennedy – the victor in Gout’s first senior race at the Maurie Plant meet two weeks ago – who is in doubt after finishing second in the 100m final on Saturday night.Minutes after losing the title to Rohan Browning in a photo finish, Kennedy revealed he was feeling the effects of three races in two days. “I’m definitely sore, definitely a little tight, but we’ll see how we pull up tomorrow,” he said
‘Don’t mention the mud balls’: Jordan Spieth hints at Masters censorship
Jordan Spieth has suggested the organisers of the Masters are applying censorship to competitors in relation to a golfing annoyance: mud balls.Spieth, the champion at Augusta National in 2015, is playing only for a place in 2025 after a third round of 69 moved him to one under par. This marked Spieth’s best round of this Masters by four but the Texan cut a frustrated figure. When mud attaches itself to a ball, a regular Masters feature and primarily from drives, approach shots can be impacted.“My iron play killed me the last two days and to be brutally honest with you, it was primarily mud balls,” Spieth explained
England outlast Ireland’s resistance and stay on course for grand slam
As the saying goes, it is the hope that kills you and that was definitely the case for the Irish fans in Cork. Ireland’s classy first-half performance had a nation daring to dream of a first win over their rivals since 2015, which highlights their remarkable improvement.Almost a year ago they fell to an 88-10 defeat at the hands of England but have gone on to beat New Zealand and the USA. The hosts kept England from scoring in this encounter until the 34th minute and they frustrated large parts of their game. But the Red Roses know how to flick a switch and turn on their clinical edge, which is exactly what they did in the second half which was complete one-way traffic as they once again proved why they are the No 1 team in the world
Northampton set up Leinster rematch after Henry Pollock batters Castres
What is the East Midlands equivalent of deja vu? For the second season in succession Northampton are into the Champions Cup semi-finals and have booked themselves a trip to Dublin to face Leinster. Last time they came within three points of victory so, on paper at least, there is still a chance that Saints can march all the way to next month’s final in Cardiff.All the evidence would suggest, though, that Leinster are a more formidable force this year than last while Northampton had be initially resolute to see off a hard-edged Castres team who competed strongly until two tries in five minutes early in the second half from the fit-again George Furbank and the man-of-the-moment Henry Pollock cracked their resistance.Castres also had three players sent to the sin-bin in an occasionally feisty contest and Pollock was toying with the visitors by the final quarter, claiming a second opportunistic try for himself after Alex Mitchell had done the initial approach work. After his two tries against Clermont last Friday and another brace for England in Cardiff last month, Pollock is certainly giving the British & Irish Lions selectors a hefty nudge
County cricket: Pope and Sibley build Surrey’s lead; Yorkshire power on
The real Manchester spring closed in at Old Trafford, the floodlights warming up as someone pulled the curtain on the sun. Northamptonshire, delighted with the turn of events, just as Lancashire came out to bat, picked away at the red rose. With five overs left, Marcus Harris, who had batted like a prince for his 43, turned a half-volley from Raphy Weatherall off his ankles straight to Justin Broad at midwicket. Anderson Phillip was drafted in as nightwatchman, lasting six balls, before being speared lbw in the final over to Calvin Harrison. Keaton Jennings walked off in the gloom, yet another fifty under his belt, but Lancashire are 357 behind and four wickets down
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