On April 7, a piece of "Trump Is Considering Suspending Tariffs for 90 Days on Some Countries" news hit the financial market like a bomb. However, no one expected that this was another piece of "fake news" that would go down in history.

The Comedy of Errors Originated from a Simple "Yep"

On April 7, the time was at a low point for the U.S. stock market, which had been falling for three consecutive days. At 10:10 a.m. Eastern Time, a rumor suddenly surfaced: the White House was considering "suspending tariffs for 90 days." As soon as the news came out, the market instantly stirred. Just 5 minutes later, at 10:15 a.m., CNBC reported that Trump was considering implementing a 90-day tariff suspension on all countries except China. This explosive news energized investors. By 10:18 a.m., the S&P 500 index soared from its low point, increasing market value by over $3 trillion. The market seemed to smell the long-lost bull market sentiment, and investors speculated that this was a signal of Trump's policy shift.

However, the plot twist came too quickly. At 10:25 a.m., there were reports that the White House was "completely unaware" of the "Trump considering a 90-day tariff suspension" matter. Shortly after, at 10:26 a.m., CNBC admitted that the earlier headline about the 90-day tariff suspension was inaccurate. By 10:34 a.m., the White House officially came forward, denouncing this rumor as "fake news." The market's mood was like a roller coaster, plummeting rapidly. At 10:40 a.m., just 22 minutes after the soaring, the S&P 500 index quickly fell back, evaporating $2.5 trillion in market value from its high point. The frenzy receded, leaving investors bewildered.

The source of this comedy of errors points to Hassett. Earlier that day, during a Fox News interview, when host Jimmy D asked a crucial question: "Will Trump consider suspending tariffs for 90 days?" Hassett first responded with a "Yep" (yes), and then said, "I think the president will make his decision... Even if you think there might be some negative impacts on the trade side, that's a very small part of GDP." This "Yep" became the spark. Financial blog Zerohedge analyzed that the market seemed to mistakenly interpret this as a nod of agreement from Hassett, but in reality, he was only using this interjection to indicate he had heard the question clearly without confirming any policy.

Never before in history has such a dramatic scene unfolded: in just 30 minutes, fake news caused a trillion-dollar wave, only to swiftly return everything to its original state.

Who Pays for Tariffs

Since taking office, Trump has vigorously promoted "America First," wielding the tariff stick against major trading partners such as China and the EU, trying to protect domestic industries and reduce trade deficits. But can this "protective umbrella" really withstand the storm? Reality is probably not that simple.

As the U.S. stock market opened on Monday, the market was already in turmoil. Trump's previous imposition of high tariffs on major trading partners pushed the S&P 500 index into a bear market for the first time since the COVID-19 pandemic. According to real-time data, the S&P 500 index (SPY) opened at $489.19 that day, but fell to a yearly low of $483.122 in early trading. However, when rumors of a "tariff suspension" emerged, at 10:15 a.m., SPY surged to $512.155, experiencing a significant market value increase. However, as the clarification came out, by 10:45 a.m., SPY fell back to $504.19, with investors watching trillions of dollars in wealth evaporate.

This episode is not an isolated incident. Last week, after Trump announced the "strictest trade barriers in a century," the S&P 500 index had fallen 20% from its high on February 19, evaporating about $9.5 trillion in market value. The speed of the decline ranks second among the 14 bear markets since 1945. The Wall Street panic indicator—the Chicago Board Options Exchange Volatility Index (VIX)—closed at 45 last Friday, then surged to 60 overnight on Monday, well above the long-term average of 20, indicating that market panic had reached its peak.

The real shadow has long loomed over the market. CFRA data shows that the S&P 500 index plummeted 3.5% at Monday's opening, officially entering a bear market. The tech sector was hit the hardest, with chip giant NVIDIA (NVDA) down 32% from its yearly high, rallying from $87.46 to $100.829 in early trading on Monday before falling back to $94.219. Tesla (TSLA) saw a drop of about 35%, fluctuating from $223.78 to $227.906 during the day. Palantir (PLTR) fared worse, briefly surging from $66.65 to $77.989 before closing at $74.001. Super Micro Computer (SMCI), ON Semiconductor (ON), and Micron Technology (MU) all dropped by over 37%. The travel industry was similarly devastated, with Delta Air Lines (DAL) and Norwegian Cruise Line (NCLH) stocks plunging over 40%.

Although this fake news was a mistake, it has prompted a reassessment of the destructive power of Trump's tariff policy. High tariffs have caused imported goods' costs to soar, with American consumers bearing the brunt. For example, a Chinese-made phone may see its price increase from $1000 to $1250 due to a 25% tariff. Companies are also feeling the pressure; Tesla (TSLA) relies on a global supply chain, and increased tariffs could raise production costs, putting pressure on stock prices. Chip giants like NVIDIA (NVDA) are facing price hikes on imported parts, squeezing profit margins.

Internationally, tariffs have triggered a retaliatory chain reaction. China and the European Union may increase tariffs on U.S. soybeans and aircraft, further harming the export industry. Global supply chains are disrupted, leading to a sharp decline in oil prices and commodity prices, creating chaos in the market. Doug Ramsey, Chief Investment Officer of Letort Holdings, warns, "This downturn may be the beginning of a new round of cyclical bear market."

This market turmoil, sparked by a fake subtitle, although brief, serves as a mirror reflecting the far-reaching impact of tariff policies. While the White House's clarification dispelled the rumors, it failed to calm the market's unease. The future actions of Trump will need to be closely watched.

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