The tariffs Trump declared have created shock waves all around the world. The expectations of Donald Trump were criticised for being unclear or harmful to global trade, as there will be a significant burden on the shoulders of importers and exporters as a consequence of higher rates.
Trump decided to pause the reciprocal tariffs for 90 days, but this is the period given to the other countries to come up with a deal that Trump can accept. So, contrary to what many of us believe, the rate may not be 1 for 1 at an equilibrium; rather, Trump may consider the trade deficit between the two countries and request a higher rate for the imports.
Even if the reciprocal tariffs will end up at higher or lower percentages, Trump will announce them in a way that there is a triumph for the U.S., thanks to his endeavor.
The markets do not care what the countries are charging each other, and both investors and companies want to be able to see their future as soon as possible. So, no matter what the results of the tariffs, unless we see three - digit super unrealistic tariffs drama as before, it will be seen as an item achieved on the to do list.
The black swan narrative of the tariffs will switch to the positive news that will make the markets believe in a greener future every time a new deal is announced. I think the first countries that announce a mutual agreement are likely to be Japan and Vietnam. The first ones will surely be a good reason for markets to pump, but then we will wait for the Euro Zone and China to turn fully bullish or stay prudent.
S&P 500 and NASDAQ are down by 10% - 15% and Trump would not let the markets close the yearly candles in red. The market - friendly president profile of Trump is very important for him and his supporters. I do not think we will let the markets go lower due to the ambiguities.
What do you think about the narrative shift expectations for tariffs?
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