I’ve not used the phrase “economic contagion” in around 15 years, it was the phrase of the year during the credit crisis of 2009. I’ve observed use of the phrase appears to be resurging.
Let me explain what this means—and why it matters to you, your family, and your future.
On April 2, the Trump administration announced a 10% universal tariff on all imports, plus retaliatory tariffs targeting 60 countries. Since then, nearly $10 trillion in global equity value has been wiped out. And while it’s too early to fully assess the long-term impact of these tariffs, the immediate reaction has been swift and brutal.
Economic contagion is when financial instability in one sector—like the stock market—spills over into the broader economy. And we’re already starting to see the early signs:
• Stock market losses are crushing consumer confidence. When Americans watch their retirement accounts and net worth shrink, they pull back. No more spontaneous dinners out, no big vacations, no new cars or home upgrades. That’s a problem, because 70% of the U.S. economy is driven by consumer spending.
• Investors are facing margin calls. As markets tank, people who borrowed to invest are being forced to sell, which accelerates the sell-off.
• Private credit is drying up. Banks and lenders are pulling back from making loans to small businesses—just as entrepreneurs need capital to survive. The massive drop in commodity prices is creating real challenges for the farming industry to access capital.
• Business leaders are spooked. A majority of CEOs now believe we’re already in a recession—or at least close to one. Nearly all agree that they won’t be making large investments anytime soon.
• Foreign governments are pulling back. Treasury auctions are seeing weaker participation from international buyers, frustrated by U.S. fiscal instability and erratic policy. That could push up interest rates, slow growth, and make our debt more expensive to finance.
And the biggest issue? The Federal Reserve is stuck. They typically lower interest rates during a slowdown—but with these new tariffs likely pushing prices up, the Fed can’t stimulate growth without worsening inflation. That’s the recipe for stagflation—rising prices and slowing growth at the same time.
This isn’t just about bad policy—it’s about a dangerous spiral. If you’ve been wondering why the stock market feels unstable, why credit is tighter, or why the mood in the economy feels off—this is it.
Tariffs may seem like a strategy to protect American jobs, but in reality, they’re setting off a chain reaction that could cost us much more. And as I said on “Liberation Day”, we’re not just watching a shift in policy—we may be living through one of the greatest self-inflicted economic wounds in modern history.
Stay informed. Ask questions. And most importantly, start planning for what may come next.
