TARIFFS: Markets hopeful of pause to allow tariff deals - experts
7th April, 2025|Luke Jeffs
Investors are hopeful President Trump may be about to announce a pause to his aggressive tariff programme and arrest the aggressive market declines that followed his announcement on Wednesday.
Citing a social media post from the head of hedge fund Pershing Square Bill Ackman in which he said he expects Trump to postpone the tariffs to buy himself time to make deals, Kathleen Brooks, a research director at XTB, said there is a hope of a reprieve.
Brooks wrote on Monday: “Ackman said that the President had used the April 2 announcement to get the world’s attention about US trade, however, he went on to add that this is an issue that cannot be resolved in a matter of days, so a pause would ‘make sense to give the President time to properly resolve this critical issue and to allow companies, large and small, the time to prepare for changes in their supply chains'.”
Brooks said a pause would likely lead to “wholehearted rally, especially stocks, but there could also be a decent increase in the price of oil, and bond yields could erase some of their recent losses”.
The XTB director added: “It is unlikely that the President would want a repeat of last week, which was truly historic for financial markets. The S&P 500 lost $5.4 trillion (£4.2tn) in market value in two days. US stocks had their worst performance since Covid, the Nasdaq 100 entered a bear market, and Magnificent 7 lost more than 10%, which could pressure US tech magnates, who are big supporters of the President, to push for a pause in tariffs.”
The sell-off continued on Monday as Asia stocks reacted to the US President’s tariffs.
At the time of writing, the Hang Seng index was down 13% on Monday and the Nikkei was down 7.8% which added pressure to European list such as the FTSE 100 which was down 4.3% and the EuroStoxx which was off 4.3% on Monday.
Eduardo Garcia Castro, a senior economist at MAPFRE, a Spanish investor, said there is a need for more work on the tariffs: “Although the latest announcements provide some additional clarity, uncertainty remains a persistent factor, as evidenced by the fact that certain details were negotiated just hours before the announcement, leaving the door open to further modifications.”
Franklin Templeton fixed income chief investment officer Sonal Desai said the tariff regime presents an opportunity to look at regulation: “While the next round of trade discussions plays out, however, it’s time for the administration – and for investors – to shift attention and focus to taxes and de-regulation.”
