Stock futures rose this morning before the open — a move analysts largely attribute to reports that the Trump administration will opt for a gradual approach to tariff increases.
Even though a better-than-expected PPI report on Tuesday helped boost equities early in the session, the S&P 500 and Nasdaq Composite indexes quickly gave back these early gains.
Let’s go back to our conversation about tariffs. Bloomberg reported yesterday that Trump’s Team is looking at increasing tariffs more slowly than initially expected, possibly by as much as 2%-5% per month. This strategy, if successful, would enable negotiations to take place and stop prices rising rapidly.
Stephen Miran’s vision for the future of America is very similar to what he told us in a podcast called Forward Guidance a few months back.
Miran reminded us that the 25% proposed tariffs for Chinese imports didn’t come all at once. We implemented a 17% rate hike on China over a period of 12 months.
“The after-tariff dollar-import price of goods coming from China was practically unchanged,” Miran commented on the episode.
Trump had proposed on the campaign trail a tariff of 10% to 20% on imports from all countries, with a 60% rate for those that come from China.
“In going to 60% tariffs on China or 10% globally, [a gradual] approach becomes even more important,” Miran wrote about the global system of trade in an article published on November 20, 2024.
If history repeats, we could see similar trade policies come down the line — which are likely to ease investor concern and boost equities.
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