Semiconductor chips and drugs are set to face higher duties, Trump told reporters at a news conference on Tuesday.“It’ll be 25% and higher, and it’ll go very substantially higher over the course of a year.” Asked if he had decided the rate of a threatened tariff on cars from overseas, Trump said he would “probably” announce that on 2 April, “but it’ll be in the neighborhood of 25%”. But are these “announcement’s real?
Today’s video is Is Wall Street ready to write off 2025? I’m seeing a gradual move on Wall Street from “Trump doesn’t mean what he’s saying about tariffs and mass deportations” to “Maybe he is serious.” On Monday, Trump announced 25% tariffs on steel and aluminum with a starting date of March 4, on top of other tariffs already announced. You can see the shift in commentary from big banks like Bank of America and JP Morgan. These companies are now saying that things that will negatively affect growth are happening much more quickly than things that will support the stock prices. New tariffs and economic uncertainty, which has caused the Fed to refrain from cutting interest rates, are happening now and will be hitting the market. Tax cuts and deregulation, which could goose growth, will take longer to implement and we may not feel those positive effects until 2026 or later. Wall Street is basically saying that 2025 will be a year of negative risks, but 2026 may be more of an upside if tax cuts and deregulation do, indeed, happen.
On Sunday, President Donald Trump told reporters on Air Force One that he plans to impose 25% tariffs on all U.S. imports of steel and aluminum. Trump said the tariffs would apply to shipments from all countries, including major suppliers Mexico and Canada. No word yet on Monday as of 11 a.m. New York time on when the duties would take effect.
Now that Canada and Mexico have earned a one-month delay in the 25% tariffs President Donald Trump had proposed to implement today, Tuesday, February 4, Wall Street is struggling to figure out if a similar deal with China will roll back the 10% hike in tariffs on imports from China that went into effect today. So far, Wall Street is betting on another deal to keep the global economy out of a full-scale trade war. Today the Standard & Poor’s 500 rose 0.72% and the NASDAQ Composite gained 1.35%. I can understand the optimism. I just don’t agree with it.
Futures markets are substantially lower as U.S. stocks get ready to open. Futures on the Standard & Poor’s 500 were down 1.64% and NASDAQ futures were off 1.87%. But I still say that Wall Street is in denial about the full economic damage from President Donald Trump’s tariffs.
Stocks moved down slightly on Friday–with the Standard & Poor’s 500 off 0.50% and the NASDAQ Composite down 0.28%–as investors started to revise their belief that President Donald Trump wasn’t really serious about raising tariffs.
Now that the White House as made it clear that the first round of tariffs–on Canada, Mexico, and China–will go into effect on Tuesday, I think we’ll see more downward movement in stocks. I don’t expect the drop to be swift or especially severe to start. That will have to wait until the economy starts to register the effects of higher prices for so much that we import. But I’d like to get ahead of this revision in sentiment with some sells now.
Effective Tuesday at 12:01 a.m. Eastern time, American importers will pay a new 25% tax on goods from Canada and Mexico and a 10% tariff on products from China, President Donald Trump said on Saturday.
The great tariffs guessing game looks like it will end tomorrow. At least Round One. Today White House press secretary Karoline Levitt said reports that tariffs wouldn’t be imposed until of tariffs from 1 March. She then said that President Donald Trump plans to impose his first round of tariffs tomorrow, February 1.
Don’t think traders and Wall Street market strategists haven’t noticed: on a day when AI stocks like Nvidia (NVDA) and Broadcom (AVGO) fell 17% each, the Dow Jones Industrial Average added 0.4%. Yes, Wall Street’s “fear gauge”—-the VIX—soared 20% the most since mid-December–but it closed the day just below 18. That’s near the index’s historical rage of normal. When the markets really afraid the VIX spikes into the 30s or even into the 40s. On a day when AI tech stocks crumbled, the market as a whole didn’t seem especially fearful.
Assuming that conventional economics still has some validity and that economic history has some predictive value, Paul Krugman, who won his 2008 Nobel-prize in economics for his work on international trading patterns, has put some numbers on the likely effects of the higher tariffs proposed by President Donald Trump. In his Substack (Krugman left the New York Times after 25 years at the end of 2024) he laid out this math.
Imports are about 11% of U.S. GDP. A first-pass estimate would be that tariffs on the scale Trump is threatening would be a 25% sales tax on goods that account for 11% of consumer spending. That would raise the cost of living by almost 3%–well over 3% if, as Trump has said he intends in some speeches, he puts much higher tariffs on imports from China. Since median household income is more than $80k, that’s around $2500 a year for the typical household.
Oil slid as U..S President Donald Trump promised to boost U.S. crude production. Brent crude retreated almost 1% to near $80 a barrel.
I expect big market moves from some of new President Donald Trump’s initial batch of executive orders. Trump has promised lots of moves for Day One. Now it remains to be seen what executive orders he actually signs in his first days in office and which ones move the financial markets.
