President Donald Trump recently suggested that there could be some “flexibility” in his reciprocal tariff scheme, indicating that the administration could be headed for a change on this front. Even so, he went no further than recommending that some tariffs be waived. This development introduces significant new apprehension for investors. They are even more worried about the long-term health of the U.S. economy in light of these new duties on the way.
Starting on April 2, these tariffs will be central to the success of Trump’s plan. He plans to go after countries that have high tariffs on U.S. exports. The proposed measures would be much more limited in scope, potentially leaving out many industry-specific responsibilities. Guidance on which industries should be considered for these exclusions remains too vague. An administration official quoted by The Wall Street Journal did not provide any further details.
Investors are still on edge, worried that the tariffs will drag down U.S. economic growth. The threat of a new slowdown has injected a new dose of uncertainty into the markets. Millions of Americans are asking how this is to be done, without wrecking our nation’s economic stability. Things haven’t been made any better by Trump’s war on U.S. trade policy, which has only served to stoke investor fear even more.
"Positioning hurdles have been cleared, sentiment has reset, flows are turning tailwinds and growth concerns are well flagged." – Bank of America's trading desk
The tariffs punish every country that has, or has threatened to, impose reciprocal duties on U.S. exports and act as a Trump Administration-style retaliation for such economic warfare. Yet the uncertainty about what constitutes a specific exemption remains an ongoing source of concern. While the administration’s plan does put a clear thrust on reciprocity — a good thing! — it fails to address what this will cost our economy.