Markets are “shaken but definitely not stirred” by the latest US tariff threats, according to financial analysit Danni Hewson.
On Tuesday the White House confirmed that the high tariffs on imports from most countries – which were due to come into effect on 9 July – would be delayed until 1 August.
That was to give time for countries to conclude trade deal negotiations.
At the same time, however, US President Donald Trump suggested that some countries would face higher tariffs than initially set out on his ‘Liberation Day’ announcement in April. He also said higher tariffs would be introduced for certain sectors – including a potential 200% tariff on pharmaceuticals.
But despite all of this, markets have remained relatively calm.
“There was a phrase coined a little while ago – the TACO trade; Trump Always Chickens Out,” said Danni Hewson, head of financial analysis at AJ Bell. “I think markets have really taken that to heart – they’ve become a bit desensitised to some of these moves that he makes.
“They’ve just gotten used to Trump 2.0 and they’ve decided that, when he brings these in that there is potentially an awful lot of wiggle room from what is the initial announcement and what then follows.”
One example of markets shrugging off the tariff threat is chip-maker Nvidia.
Its shares plummeted in April, as the initial threat of tariffs was seen as a threat to global demand for its products. But the share price quickly recovered and – despite semiconductors being named this week as one of the sectors that would face high tariffs – it reached new highs yesterday.
“We’ve seen some remarkable moves by companies like Nvidia in the wake of those Liberation Day tariff announcements,” said Ms Hewson. “It slumped massively in the wake of that but it’s now recovered all of that, and then some, becoming the world’s most valuable company.
“It did end up slightly down at $3.97 trillion – but when you’re talking about a company that, not so long ago, was valued at $500m, I don’t think many people are going to quibble at that.”
She said this was a clear sign, though, that markets are putting aside the threat of tariffs and focusing on things like the artificial intelligence boom.
“But we have got [Nvidia] earnings coming up and I think investors are going to be looking at the impact of tariffs on those,” she said.
One move that did surprise markets yesterday was the announcement by Linda Yaccarino that she was stepping down from her role as CEO of social media platform X.
Tasked with repairing the relationship between X and advertisers, Ms Hewson said that many felt she was ultimately CEO in name only.
“X is a very different place than it was when it was Twitter – some advertisers will never come back,” she said. “Elon Musk is taking things in a very different direction – subscription models and that kind of thing – so maybe he doesn’t need advertisers as much.
“For Tesla shareholders – which were down again yesterday – they’ll be thinking does that mean he’s now got to take control [at X] while he looks for someone else to take on the CEO role.”
Article Source – Markets ‘shaken but not stirred’ by Trump’s latest tariff threats – RTE