Stock markets surging due to potential tariff concession on account of Trump's 'Freedom Day' declaration
Trump's Tariff Shenanigans: All Style, No Substance?
It seems like President Donald Trump's long-awaited tariffs are shaping up to be quite the spectacle, much like his presidential campaigns. But as history has shown, all hype and little action might just be the buzzword of the day.
According to reports from Bloomberg and the Wall Street Journal, the administration is trying to manage expectations that the tariffs announced will not be the comprehensive, all-encompassing package everyone's been expecting. Instead, a significantly reduced batch of tariffs will be unveiled next week, and more could follow later, although the situation remains fluid. The White House has yet to comment on the reports.
Investors are breathing a sigh of relief as US stock futures rallied Monday morning. The Dow is set to open 350 points higher, the S&P 500 up 1.1%, and the Nasdaq up 1.3%. This uptick is due to the relief that the most punishing tariffs may not be coming as soon as many on Wall Street had feared.
Trump's "Liberation Day," billed as a day of massive reciprocal tariffs that match foreign countries' import taxes dollar for dollar, may not feature the broad range of products Trump had promised. This includes autos, pharmaceuticals, microchips, copper, lumber, and other products.
Now, it appears, those product-specific tariffs will not be enacted on the 2nd of April, according to the Journal and Bloomberg. As for the 25% tariffs on Mexican and Canadian goods, it’s unclear whether they will take effect or be further postponed.
Reciprocal tariffs will go into effect, perhaps as soon as April, but they will be limited to a dozen or so countries. These countries could include Australia, Brazil, Canada, China, the European Union, India, Japan, South Korea, Mexico, Russia, and Vietnam.
It's important to note that these tariffs are not the first rodeo for Trump. He campaigned on steep tariffs on Day One, but failed to deliver on that promise. Instead, he signed several executive actions ordering his administration to investigate whether to pursue tariffs on a wide range of goods. Now, it seems we're back to square one.
The administration has been setting the stage for a walkback for days. Trump in the Oval Office Friday hinted that his administration would allow for "flexibility" on tariffs – the first sign of potential exemptions after he had pledged there would be none.
In the end, the tariffs could potentially inflict undue harm on Americans and US interests, much like a sledge hammer instead of a scalpel. "I don't change. But the word 'flexibility' is an important word," Trump said. "So there'll be flexibility, but basically it's reciprocal," he added, noting most tariffs will simply match foreign countries' taxes dollar for dollar with no carve-outs.
Negotiations are ongoing, but Trump's on-again, off-again tariffs are giving investors, businesses, trading partners, and consumers a serious dose of whiplash. It seems we've been here before. Let's just hope this tariff rollercoaster doesn't leave us spin-headed.
- The significant reduction in the tariffs announced by the administration, as reported by Bloomberg and the Wall Street Journal, has caused US stock futures to rally, such as the Dow, S&P 500, and Nasdaq.
- The possibility of limited reciprocal tariffs, restricted to fewer than a dozen countries, has provided relief for some businesses who had feared the negative impact of the most punishing tariffs.
- Despite Trump's previous promises of comprehensive and all-encompassing tariffs, potential exemptions and a degree of 'flexibility' indicate a potential walkback on the policy, which has created a sense of uncertainty and whiplash for investors, businesses, and trading partners.
