Recent developments in Trump’s draconian trade policies — marked by steep tariffs, fluctuating commodity markets and geopolitical maneuvers — present a highly complex and uncertain landscape. Despite dramatic announcements and headline-grabbing tariff threats, markets have remained oddly resilient, while underlying forces quietly shift. For e.g., Trump’s imposition of steep tariffs—such as 200% on pharmaceuticals and 50% on copper—has less to do with traditional economic rationale and more with political leverage
Trump Tariffs
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Why Earnings Expectations Feel Too High
Factset reported S&P 500 companies are “highly uncertain” for the balance of this year. This is well above the 10-year average of 179; and more than double the previous quarter. And it makes sense… it’s impossible to know what impact tariffs could have over the coming two to three quarters (or more). But what’s almost certain – any impact won’t be positive. We can say with certainty that tariffs (even if only 10%) are an economic burden – where I estimate the cost to both companies and consumers to be more than $300B. So who will pick up the tab?
Brand USA Downgraded
The stock market has risen at a dizzying speed the past six weeks – up over 20%. I would reduce risk at these levels. We’re now back at valuations similar to the beginning of the year – however the risks are now considerably higher. But let’s say the net result is a tariff rate in the realm of between 10% and 30% – that would be disastrous. My back-of-the-envelope math estimates a substantial $300B “economic burden” that both companies and consumers will be forced to bear.