After the about-face
The relief rally has gone global, for now.
Stocks in Asia and Europe have rebounded after President Trump’s drastic U-turn on tariffs. Turmoil in the bond markets has cooled, as investors hope that the president averted crashing the global economy into recession.
But U.S. stock futures are in the red as uncertainty abounds. Businesses and investors have little visibility into the White House’s next moves, even as some corporate leaders take comfort in the markets’ role in prompting the reversal. (More on that below.)
Where things stand: Trump announced a 90-day pause for his most punishing reciprocal tariffs, instead imposing a blanket levy of 10 percent. Even so, the effective tariff rate on imports has increased by 21 percentage points since January, according to Citigroup economists, potentially reigniting inflation.
But Washington and Beijing are still imposing tit-for-tat tariffs — with Chinese import duties now at 125 percent. Businesses and governments are worried that the fight could destabilize global supply chains, drive up inflation and hurt growth, with some wondering if China is a safer trade partner.
The latest:
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S&P 500 futures are lower, after the benchmark index jumped 9.5 percent yesterday in its best one-day performance since 2008. Goldman Sachs and others lowered their odds for a U.S. recession.
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There’s extra focus on today’s Consumer Price Index report, set for release at 8:30 a.m. Eastern. Worth watching: Did Trump’s tariffs on the auto sector cause another jump in used car prices last month?
Bulls see reason to cheer this morning. Many analysts note that the 10 percent tariff would be far less burdensome on companies and consumers. And prolonged market calm would help Trump pursue more tax cuts and deregulation.
Others say that the “Trump put” is alive and well. (That’s shorthand for investors’ belief that the president is willing to reverse policies deemed detrimental to the economy.)
