On April 7, the news that "Trump is considering suspending tariffs on some countries for 90 days" hit the financial market like a bomb. But no one expected that this was another "fake news" that would go down in history.

The misunderstanding was caused by a "Yep"

On April 7, the U.S. stock market was in a slump after falling for three consecutive days. At 10:10 a.m. Eastern Time, a rumor suddenly emerged: the White House is considering a "90-day tariff suspension." As soon as the news came out, the market was instantly agitated. Just five minutes later, at 10:15, CNBC reported that Trump was considering a 90-day tariff suspension on all countries except China. This explosive news made investors excited. By 10:18, the S&P 500 index soared from its low point, with a market value of more than $3 trillion. The market seemed to smell the long-lost bull market, and investors speculated that this was a signal of Trump's policy shift.

However, the plot twist came too quickly. At 10:25, it was reported that the White House was "unaware" that "Trump was considering a 90-day tariff suspension." Then, at 10:26, CNBC admitted that the previous headline report of the 90-day tariff suspension was wrong. By 10:34, the White House officially came out and dismissed the rumor as "fake news." The market sentiment was like a roller coaster, taking a sharp turn. At 10:40, the S&P 500 index, which had been soaring just 22 minutes ago, quickly fell back, evaporating $2.5 trillion in market value from its highs. The frenzy receded, leaving investors confused.

The source of this blunder was pointed to Hassett. Earlier that day, when he was interviewed by Fox News, host Jimmy asked a heavy question: "Will Trump consider suspending tariffs for 90 days?" Hassett first said "Yep" (yes), and then replied: "I think the president will make his decision... Even if you think there will be some negative impact on trade, it will only account for a small part of GDP." This "Yep" became the fuse. Financial blog Zerohedge analyzed that the market seemed to mistakenly think that this was Hassett's nod of agreement, but in fact, he just used this interjection to indicate that he heard the question clearly and did not confirm any policy.

Such a dramatic scene has never been seen in history: in just 30 minutes, fake news caused a trillion-dollar wave, and then quickly returned to its original state.

Who pays for tariffs?

Since Trump took office, he has held high the banner of "America First" and wielded the tariff stick against major trading partners such as China and the European Union in an attempt to protect domestic industries and reduce trade deficits. But can this "protective umbrella" really keep out the wind and rain? The reality is probably not that simple.

When the U.S. stock market opened on Monday, the market was already in turmoil. Trump's previous high tariff barriers against major trading partners pushed the S&P 500 Index (SPY) into its first bear market 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 year-to-date low of $483.122 in early trading. However, when rumors of a "tariff suspension" came out, SPY soared to $512.155 at 10:15, and its market value surged. However, as soon as the clarification news came out, by 10:45, SPY fell back to $504.19, and investors watched trillions of wealth evaporate.

This blunder is not an isolated incident. Last week, after Trump announced the "toughest trade barriers of the century", the S&P 500 index has fallen 20% from its all-time high on February 19, with a market value of about $9.5 trillion evaporated. The fastest decline ranks second among the 14 bear markets since 1945. Wall Street's panic indicator, the Chicago Board Options Exchange Volatility Index (VIX), closed at 45 last Friday and soared to 60 overnight on Monday, far exceeding the long-term average of 20, indicating that market panic has reached its peak.

The real shadow has long shrouded the market. According to CFRA data, the S&P 500 index plunged 3.5% at the opening on Monday, officially falling into a bear market. Technology stocks were the first to be hit, with chip giant Nvidia (NVDA) falling 32% from its high this year. It rose from $87.46 to $100.829 in early trading on Monday before falling back to $94.219. Tesla (TSLA) fell about 35%, fluctuating from $223.78 to $227.906 on the same day. Palantir (PLTR) was even worse, rising from $66.65 to $77.989 before closing at $74.001. Super Micro Computer (SMCI), ON Semiconductor (ON), and Micron Technology (MU) all fell by more than 37%. The tourism industry was also in mourning, with Delta Air Lines (DAL) and Norwegian Cruise Line (NCLH) seeing their share prices plummet by more than 40%.

Although this fake news is a false alarm, it has made people re-examine the lethality of Trump's tariff policy. High tariffs have caused the cost of imported goods to soar, and American consumers are the first to bear the brunt. For example, a Chinese-made mobile phone may increase from US$1,000 to US$1,250 due to a 25% tariff. Companies are also not doing well. Tesla (TSLA) relies on the global supply chain, and the increase in tariffs may push up production costs and put pressure on its stock price. Chip giants such as Nvidia (NVDA) are facing rising prices for imported parts, squeezing their profit margins.

At the international level, tariffs have triggered a chain reaction of retaliation. China and the European Union may impose tariffs on American soybeans and aircraft, which will make the export industry even worse. The global supply chain is disrupted, oil prices and commodity prices have plummeted, and the market is in a mess. Doug Ramsey, chief investment officer of Letold Group, warned: "This wave of decline may be the beginning of a new round of cyclical bear market."

Although the market turmoil caused by a fake subtitle was short-lived, it reflected the far-reaching impact of the tariff policy like a mirror. The White House's clarification calmed the rumors, but it could not calm the market's anxiety. We have to keep an eye on how Trump will play his cards in the future.

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