The President said yesterday that the team has already started to move forward with reciprocal Tariffs. Advisors were instructed to develop new tariff levels, taking into consideration fees and taxes placed by the US on exports.
Timeline is uncertain. Howard Lutnick’s nomination as Commerce Secretary said that the studies might be complete by April 1. If confirmed, Lutnick will collaborate with the US Trade Rep to establish the new levy.
Trump stated that the import taxes will be tailored country by country to counterbalance tariffs on US products and other non-tariff barriers such as exchange rates, value added taxes and tariffs.
Trump’s statement was well received by the markets, an indication that it wasn’t quite as bad as investors feared or at least that tariffs will be in place for several weeks. The S&P 500 and Nasdaq Composite both reversed midway through Thursday’s session to close 1% and 1.3% higher, respectively.
Investors will be uneasy due to the uncertainty surrounding the type of tariffs that may come into effect and their timing. But generally, we expect talk of tariffs — and therefore market impact — to die down a bit over the few weeks while advisers conduct their trade studies.
Data will be the main factor that moves markets in the interim. The Fed will release the FOMC minutes and some of the key manufacturing figures next week. These two items are useful for determining the length of time that the rate cutting cycle can be suspended.
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