Liberation Day Tariffs
Market Expectations
“Tariffs will be targeted at 10-15 countries. Markets expect 'less bad than feared.'”
Our Simulation
Brief relief rally then rapid risk-off. Scope will be global, not targeted. Agriculture hit by retaliation. Bond market stress forces partial walk-back.
What Actually Happened
S&P 500 crashed >10%. Tariffs were global. 90-day pause after bond market near-crash. S&P surged 9.52% on pause.
What the Agents Said
Direct quotes from AI agents during the simulation - each with a unique persona, incentives, and behavioral logic.
“Trade-policy uncertainty remains a key macro risk channel - often impacting markets via confidence and financial conditions before it appears in aggregate activity data.”
“Tariff headlines move markets, but the mechanics will determine real impact: which legal authority is used, product/country coverage at the HTS-line level, effective dates/phase-ins, and any exclusions.”
“The deeper risk is that once market share is lost it's very difficult to quickly reclaim, as importers establish new stable supply relationships in South America.”
“Rates showed a classic push-pull: tariff inflation risk premia up, growth worries pushing real rates down; I watched the 2s10s shape and whether real or nominal led.”
Agents in This Simulation
Each agent has a unique persona with distinct incentives, memories, and behavioral logic. They interact on simulated social platforms across 30 rounds.
Accuracy Scorecard (9 HITs, 1 PARTIALs, 0 MISSes)
Simulation predicted rapid risk-off after initial relief rally
Predicted 'sledgehammer, not scalpel' after Trump dismissed 10-15 country framing
Soybeans and pork identified as first retaliation targets
Correctly identified bond market as the binding constraint forcing the pause
Predicted 'rhetoric stays broad, implementation narrows' under market pressure
Internal debate enabling face-saving narrowing identified
Sector logic present but specific April 11 exemption not pinpointed
73% Reuters/Ipsos aligned with simulation's consumer anxiety
Questioned legal authority; CIT ruled illegal May 2025
UK, China deals followed the simulation's predicted pattern
Key Metrics (Ground Truth)
“Bond Market Stress”
The simulation predicted the bond market - not the stock market - would be the proximate cause of the policy reversal. While everyone watched the S&P 500, it was the Treasury sell-off and bond vigilantism on April 8-9 that actually forced Trump's hand. The simulation's cross-asset analysis flagged credit spreads and USD as the 'financial conditions tell' that would distinguish a sentiment shock from a growth shock.