The tariff uncertainty isn't getting any better in markets: Chart of the Week

Key Points:

  • The S&P 500 experienced its worst week since 2020 followed by its best day since 2008, highlighting market volatility.
  • President Trump's tariff policies have led to an increase in the effective US tariff rate from 22.5% to 27%, contributing to market uncertainty.
  • A 90-day delay on some tariffs was announced, but tariffs on Chinese imports were increased to 145%, further complicating economic forecasts.
  • Experts suggest that ongoing tariff uncertainty could lead to a recession, with consumer and business confidence being undermined by the unpredictability.

Summary: The recent market volatility, characterized by a significant drop in the S&P 500 followed by a sharp recovery, underscores the ongoing uncertainty driven by President Trump's tariff policies. Since the announcement of the largest US tariff increase in a century, the effective US tariff rate has risen from 22.5% to 27%, despite a 90-day delay on some tariffs. This unpredictability has left investors and businesses in a state of flux, with fears that prolonged uncertainty could lead to a recession. Analysts like Michael Kantrowitz from Piper Sandler and Neil Dutta from Renaissance Macro have highlighted the detrimental effects of this uncertainty on investment and consumer spending. The key to avoiding a downturn, according to BNP Paribas' James Egelhof, lies in further tariff negotiations between the US and China. However, with the rules of the economic game constantly changing, businesses find it challenging to plan and invest, which in turn affects stock market stability and economic growth.

yahoo
April 12, 2025
Stocks
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