\u201cThe market is assuming that a lot of this tariff policy will go away, and I don\u2019t think it will,\u201d said a former top Trump official. \u201cTrump has always liked tariffs.\u201d\u00a0<\/p>\n
The S&P 500 share index has surged about 30 per cent from an April low, rebounding since Trump paused the sweeping tariffs he announced during his \u201cliberation day\u201d event at the start of that month. Equities have broadly shrugged off his latest batch of tariff threats<\/a> this week against large global economies including Japan, South Korea, Canada and Brazil. <\/p>\n Trump has insisted he will carry through with his threat to impose steep \u201creciprocal\u201d levies beginning on August 1, pledging there would be no \u201cextension\u201d if counterparts do not reach trade deals. Only three countries have done so \u2014 the UK<\/a>, China<\/a> and Vietnam<\/a>. <\/p>\n Many Wall Street banks\u2019 research departments have told clients Trump will probably water down his most severe levies rather than risking another bout of market turbulence. <\/p>\n This sanguine view has helped keep measures of expected volatility in US stock and bond markets subdued, and pushed down the cost of borrowing for US companies. <\/p>\n Goldman Sachs on Friday noted \u201ccredibility questions can help explain the more muted reaction\u201d in US equities to Trump\u2019s barrage of tariff announcements this week compared to the tumult in early April. The S&P 500 closed at a record high on Thursday and was little changed on Friday. <\/p>\n But some bankers and investors are growing increasingly anxious that the president could surprise markets by sticking to his guns. <\/p>\n Robert Tipp, head of global bonds at PGIM, said: \u201cIt is a surprising environment in the sense that the Taco sentiment could be going by the wayside. The tariffs that have ended up sticking are somewhat high. And yet markets have cruised on. Will there be a day of reckoning?\u201d<\/p>\n Market participants said it was not tariffs alone that risked a fresh bout of market upheaval. <\/p>\n Trump has repeatedly pressed Federal Reserve chair Jay Powell to lower interest rates in an attack on the central bank\u2019s independence. Meanwhile, Congress has passed the president\u2019s flagship budget bill, which is forecast by independent analysts to add trillions of dollars in public debt in coming years. <\/p>\n![\"Line](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2025\/07\/https:\/\/d6c748xw2pzm8.cloudfront.net\/prod\/ab17d4c0-5da8-11f0-b029-fb45b38e3967-standard.png\")
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