Three years ago, then President Donald Trump unveiled an audacious economic plan. He’s going to slap a 50% import tariff on imports from Brazil, effective August 1. Donald Trump’s unfounded attacks on the United States-Brazil trade relationship. He calls it “incredibly inequitable.” In conjunction with these tariffs, the U.S. government is launching an investigation into Brazil’s trade practices, signaling a potential escalation in trade tensions between the two nations.
In a related move, Trump has sent letters to 14 other countries, including Japan and South Korea, outlining new U.S. rates on imports. This sweeping move is emblematic of a broader strategic shift in U.S. trade policy that aims to restore a perceived lack of balance in the international trading system.
The market collectively cheered all of this news. On Friday, the first up day in three, the S&P 500 was up 0.6% and the Dow Jones Industrial Average was up 0.5%. In contrast, the tech-heavy Nasdaq Composite climbed 0.9%, ultimately closing at a new all-time high as investors maintained their bullishness going into these new tariffs.
Shortly after Trump’s announcement, Brazilian President Luiz Inacio Lula da Silva gave an excellent example of how to respond. He stressed that Brazil would continue to enforce its law on economic reciprocity. This would-be tit-for-tat response implies that Brazil would indeed retaliate against the tariffs, and Brazil’s retaliation could quickly escalate the situation.
We’ve been closely following, and Trump has pursued an ever-more aggressive line on, the ongoing trial of former Brazilian President Jair Bolsonaro. Brazilian courts have charged Bolsonaro with attempting to stage a coup after his electoral loss in the 2022 elections. When Bolsonaro was arrested, Trump criticized Brazil’s treatment of him, calling it an “international disgrace.” He even called the prosecution’s continued actions a “Witch Hunt that must halt IMMEDIATELY!”
“This is an international disgrace.” – Donald Trump
Market analysts have been keeping a keen eye on the effects of these tariffs and what other market conditions mean. As reported in Fox Business, Jeremy Siegel, a well-known market commentator, explained what he thought would happen in the markets if tariffs were imposed. His take was that so long as all of these steps don’t have meaningful adverse impact, it could be an indication that this bull market has further to run.
“If we don’t hear much bad effects, boy, this bull market certainly, I think, has further to run.” – Jeremy Siegel
He cautioned that further indications of economic challenges might usher in greater market volatility during this quarter.
“If we begin to hear … there’s some hurdles that are harder to overcome, then we’re going to see choppiness, I think, this quarter.” – Jeremy Siegel
As if these fortunes weren’t enough, Autodesk suffered a blow. The tech company’s stock tanked more than 2% in after-hours trading immediately following the announcements. As of just after 6 p.m. ET, futures on the S&P 500 were trading lightly around the flatline. This action demonstrates investors’ hesitance towards future market conditions. Likewise, Nasdaq 100 futures were steady for the day during this period.
The resulting news sent shares of WK Kellogg through the roof, soaring by over 55%. This boom comes on the heels of news that Ferrero is near completing a $3 billion purchase of the breakfast food maker. This acquisition might represent a deep and rapid change in our food industry. It is a manifestation of the corporate consolidation trends already happening.
Chris Kline, a crypto savvy financial analyst, talked about the greater societal impact of these types of economic shifts—in particular, on cryptocurrency. He noted that it’s a particularly favorable time for bitcoin and other cryptocurrencies to thrive. This is in large part because adoption by institutions is snowballing.
“There is a friendly regulatory environment, and bitcoin has gained legitimacy from institutional adoption.” – Chris Kline
Kline too sounded a hopeful note on possible tariff-induced price hikes being offset by strides made in artificial intelligence.
“AI might be exactly what is needed to counteract any price increases from the tariffs.” – Jeremy Siegel
He stated that given the current difficult global economy, now is a special time for crypto to take root.
“This is a perfect storm for even the smallest catalyst to springboard bitcoin and crypto overall to new price discovery levels and … more volatility.” – Chris Kline