Tariffs unmask fragile economy

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The U.S. economy is a house of cards. It’s built on outsourcing labor overseas, enriching corporations that funnel those profits into stock buybacks and executive bonuses. This cycle artificially inflates corporate earnings and creates the illusion of growth, but it’s come at a heavy cost to the middle class. Real wages stagnate, living standards decline, and entire communities are left behind.

Tariffs might have popped that bubble — exposing the shaky foundation beneath the facade of economic success. When these tariffs were introduced, the immediate response wasn’t just market volatility. It was a glaring revelation of how fragile the entire system really was. The markets, in their infinite hunger for liquidity, have been relying on the Fed’s backstop for years. Without that liquidity, the bottom simply falls out.

The pattern is clear: when the reverse repurchase agreement (RRP) window closes, we get a dramatic fall. Just a few weeks after that bottom, we saw the worst stock market day in four years. Anyone watching the system with even a modicum of understanding saw this coming. Yet, the majority of analysts and market participants were caught off guard. The post-2008 recovery was nothing more than a thinly veiled illusion. The so-called “growth” was all about artificially inflated asset prices and an economy kept afloat by the Fed’s liquidity injections.

Scott Bessent, Treasury Secretary, summed up the situation best when he spoke to Tucker Carlson. He noted that the U.S. economy is deeply skewed, with wealth increasingly concentrated at the top. He provided some eye-opening statistics:

  • The top 10% of Americans own 88% of equities.

  • The next 40% own just 12% of the stock market.

  • The bottom 50%? They are in debt.

This stark inequality underscores how deeply the current system favors the wealthy, leaving the rest of the population to bear the brunt of the consequences.

Consider this: in the summer of 2024, more Americans than ever before had to rely on food banks. This statistic alone highlights the deepening crisis in the consumer economy. As the tariffs take their toll, it’s evident that the American consumer is already stretched thin. While politicians and pundits argue about the impact of tariffs, the reality is undeniable.

If tariffs are so harmful, then why do our supposed allies still implement them? If the American consumer is going to bear the burden of these tariffs, why do other nations remain unaffected by their own trade barriers?

The U.S. economy is teetering on the edge, and this moment of reckoning was inevitable. For years, the government has been propping up a system built on outsized stock prices, debt-fueled consumption, and global imbalances. The tariffs are only exposing the fragility beneath the surface. The long-term solution? We need a recalibration, but that will require a shift in priorities.