Trump relaunches the trade war—why haven't markets revolted?

Investors just aren’t as spooked by the T word as they used to be.

Despite President Trump threatening a whole new set of tariffs this week, investors are staying calm. The S&P 500 and Nasdaq notched a record on Thursday, the king of the stock market, Nvidia, became the first public company to reach a $4 trillion market cap, big names on the Street are upping their price targets, and volatility is way down. That’s nothing like how investors reacted after April 2, aka Liberation Day, when traders wiped out roughly $6 trillion in market value in just two days.

Here are some of the tariff announcements investors had to duck, dip, dive, and dodge this week:

• Trump announced revised tariff rates on a slew of countries, including Vietnam, Japan, South Korea, and Myanmar, and pushed the deadline for tariff negotiations with major trading partners from July 9 to August 1.
• Trump said yesterday he would raise tariffs on Canada from 25% to 35%, starting August 1, and also threatened a 50% tariff on Brazil on the same date.
• He rolled out a 50% tariff on copper and threatened 200% tariffs on pharma imports.

“I think the tariffs have been well-received. The stock market hit a new high today,” Trump told NBC News last night.

So, why hasn’t the market freaked out?

With so much tariff back-and-forth over the past few months, traders have begun to brush off the never-ending trade war news, not trusting that every Truth Social post will ultimately translate into permanent policy—aka the TACO (Trump Always Chickens Out) trade.

And despite the ongoing trade uncertainty, the US economy appears to be chugging along just fine, and more companies are expected to post better financial results than previously thought. In fact, the consensus earnings of the S&P 500 over the next year are $8 higher than on February 19, according to Bloomberg. Jobless claims fell for a fourth week in a row. And most Fed officials predict rate cuts this year.

The other shoe could drop: Are these all good reasons to assume sunny skies are ahead? Not really, at least according to Jamie Dimon. “Unfortunately, I think there is complacency in the markets,” the JPMorgan Chase CEO said yesterday.

Or, the reality is somewhere in between the good times rolling forever and the Dimon doomsday scenario: “Our base case is that the effective US tariff rate will land near 15% by year-end, slowing the US economy over the next six months but not causing a recession,” explained CIO Americas and Global Head of Equities, UBS Global Wealth Management Ulrike Hoffmann-Burchardi. —LB