{"id":61459,"date":"2025-08-11T12:52:11","date_gmt":"2025-08-11T12:52:11","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/61459\/"},"modified":"2025-08-11T12:52:11","modified_gmt":"2025-08-11T12:52:11","slug":"trump-is-calling-wall-streets-bluff-on-tariffs","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/61459\/","title":{"rendered":"Trump is calling Wall Street\u2019s bluff on tariffs"},"content":{"rendered":"

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\n Wall Street traders embraced the term TACO \u2014 Trump always chickens out \u2014 earlier this year to describe President Donald Trump\u2019s on-again, off-again position on tariffs. Trump liked to impose hefty import taxes but would inevitably back off when markets plunged, analysts said.\n <\/p>\n

\n Now Trump is calling the market\u2019s bluff.\n <\/p>\n

\n Yet another round of new tariffs went effect on Thursday, lifting the average tax on US imports to the highest level since the 1930s.\n <\/p>\n

\n Trump bet markets would absorb this latest news, adapt and move on \u2014 and so far he appears to have been right.\n <\/p>\n

\n Stocks still closed higher on the week, with the Nasdaq hitting a record high on Friday and the S&P 500 notching its best week in over one month.\n <\/p>\n

\n It\u2019s a remarkable shift from early April, when the president\u2019s \u201cLiberation Day\u201d tariffs caused stocks across the globe to plunge<\/a>.\n <\/p>\n

\n But with economists saying tariff effects could take weeks or months to play out, it\u2019s too soon to declare victory just yet.\n <\/p>\n

\n \u201cHe is succeeding in implementing major tariffs without shocking the stock market,\u201d said Ethan Harris, former head of global economics at Bank of America. \u201cIt\u2019s surprising, and you could call it an accomplishment if you\u2019re in favor of tariffs.\u201d\n <\/p>\n

\n Trump may be winning the hand, but Wall Street has lots of cards left. The game isn\u2019t over.\n <\/p>\n

\n Investors in recent months have embraced the \u201cTACO\u201d trade<\/a>.\n <\/p>\n

\n A better description would be, \u201cTrump always tries again,\u201d according to Harris.\n <\/p>\n

\n With the latest import taxes, Trump is pushing forward with an average tariff rate just slightly slower than what he tried to impose on April 2, according to the Budget Lab at Yale.\n <\/p>\n

\n While stocks are hovering near record highs, Harris said he expects tariffs will inflict \u201creal damage\u201d on the economy, and it remains to be seen if investors will stay complacent.\n <\/p>\n

\"Containers<\/p>\n

\n The inclusion of carveouts has softened the blow of tariffs, according to Kurt Reiman, head of fixed income at UBS. That has helped temper investors\u2019 concerns.\n <\/p>\n

\n Apple (AAPL<\/a>), for example, is exempt from tariffs<\/a> on some imports from India and tariffs on semiconductors because of its pledge to develop production in the United States. Apple stock last week soared 13% and had its best week since 2020.\n <\/p>\n

\n \u201cThe tariff wall being built by the administration also has many holes because of numerous product exemptions, carveouts and delayed implementation dates,\u201d Reiman said.\n <\/p>\n

\n Enthusiasm about the AI boom in the United States is also driving market momentum and drawing attention away from tariffs.\n <\/p>\n

\n While investors have been concerned about trade, blowout earnings from big tech companies like Nvidia (NVDA<\/a>) and Meta (META<\/a>) have helped buoy the market.\n <\/p>\n

\n In addition, trading partners have largely not retaliated, avoiding a global trade war that would have had worse outcomes for the US economy, according to David Doyle, head of economics at Macquarie.\n <\/p>\n

\n \u201cWhat\u2019s really struck me is how little Trump has had to chicken out from,\u201d Robert Armstrong, the Financial Times columnist who coined the term \u201cTACO,\u201d told CNN\u2019s Richard Quest in an August 1 interview<\/a>.\n <\/p>\n

\n Wall Street\u2019s fear gauge, the CBOE Volatility index, spiked in early April above 50 points \u2014 a historic level not seen since the Covid pandemic or the 2008 financial crisis.\n <\/p>\n

\n The VIX in August just briefly breached 20 points \u2014 a level associated with slightly noticeable volatility \u2014 before retreating.\n <\/p>\n

\n Investors are maintaining faith in a \u201cTrump put,\u201d or the notion that if the markets do plummet, the president will refine his approach.\n <\/p>\n

\n The \u201cTrump put\u201d is different from chickening out, analysts say, as the president might back down just enough to satisfy markets before pushing forward again with his tariffs when he is able to.\n <\/p>\n

\n \u201cHe always tries again until the equity market punishes the policy,\u201d Harris said. \u201cThat\u2019s the old \u2018Trump put\u2019 idea, which is the way people used to talk about it, and is still the correct way to think about the trade war.\u201d\n <\/p>\n

\"US<\/p>\n

\n While Trump has implemented his tariffs, it might be too soon to call victory. Investors are awaiting data on inflation and the labor market in upcoming months to get a better sense of how tariffs are impacting the economy.\n <\/p>\n

\n \u201cAs an investor, you can talk yourself into not worrying about tariffs, but if you\u2019re a company trying to make business plans, you can\u2019t afford to ignore the tariffs,\u201d Harris said. \u201cThe stock market and the economy are not the same thing.\u201d\n <\/p>\n

\n Arun Sai, senior multi-asset strategist at Pictet Asset Management, said investors are taking two leaps of faith in believing in the resilience of the US economy and that \u201cthe stagflationary impulse of tariffs\u201d \u2014 slower growth and stickier inflation \u2014 won\u2019t be as bad as initially feared.\n <\/p>\n

\n Markets are a \u201clittle too complacent,\u201d Sai said, and he will be watching the next two inflation reports ahead of the Federal Reserve\u2019s September policy meeting for any sign of tariff-induced increases in prices.\n <\/p>\n

\n \u201cBy no means are we out of the woods,\u201d Sai said. \u201c We are priced for nothing to go wrong, and yet we still have a very important inflection point ahead of us.\u201d\n <\/p>\n","protected":false},"excerpt":{"rendered":"Facebook Tweet Email Link New York \u00a0\u2014\u00a0 Wall Street traders embraced the term TACO \u2014 Trump always chickens…\n","protected":false},"author":2,"featured_media":61460,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[43,44,41,39,42,40],"class_list":["post-61459","post","type-post","status-publish","format-standard","has-post-thumbnail","category-headlines","tag-headlines","tag-news","tag-top-news","tag-top-stories","tag-topnews","tag-topstories"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/61459","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=61459"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/61459\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/61460"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=61459"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=61459"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=61459"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}