US Stocks Steady Amid Tariff Threats
US stocks remained stable on Monday, indicating that Wall Street is becoming somewhat desensitized to tariff threats from President Donald Trump.
The Dow Jones Industrial Average was holding its ground at noon, while the S&P 500 was barely changed, and the Nasdaq Composite gained 0.25%.
On Saturday, Trump announced that a 30% tariff on goods from the EU and Mexico would take effect on August 1. However, both regions expressed a willingness to continue negotiations, which led investors to downplay concerns about a prolonged trade dispute. Earlier, Trump stated that Canadian goods not covered by existing trade agreements would face a 35% tariff.
Instead of reacting sharply to the new tariff announcements, the market seems to have accepted that higher tariffs are now a reality, rather than seeing them as a threat to the US economy. Consumer prices haven’t spiked due to tariffs, and other countries have yet to retaliate in response to the latest announcements, which may ease investor worries about the economic fallout.
This week, new inflation data is also on the horizon, potentially influencing expectations around interest rate policies. Investors are keen to see if inflationary pressures have moderated, despite previous tariffs being put in place.
Tensions between the White House and the Federal Reserve are also worth noting. On Sunday, Kevin Hassett, the director of the National Economic Council, mentioned to ABC News that Trump could consider removing Fed Chairman Jerome Powell “if there is a reason.” Discussions are ongoing regarding the costs associated with renovations to the Federal Reserve’s main building in Washington, D.C., while Trump continues to critique Powell for not lowering interest rates.
Despite ending last week in the red, the main index remains close to record highs. The calm response on Monday suggests that investors have adapted to the announcement of new tariffs without panicking. Following the tariff announcement back in April, shares have surged; with the S&P increasing by 25%, benefiting those who either bought or held their shares afterward. The S&P climbed 5.9% in June and has risen 3% since Trump took office, with stocks up 9.3% compared to a week before the 2024 election.
