As President Donald Trump unveiled a blitz of new tariffs across different countries on Thursday, the markets remained largely unfazed by the move.
What Happened: On Thursday, in a post on X, The Kobeissi Letter highlighted the market’s muted response to Trump’s sweeping new moves on the trade and tariff front.
The post notes that Trump “randomly” increased tariffs on Canada, the largest trading partner of the United States, from 25% to 35%. Followed by a string of new tariffs on others, such as “Vietnam, Switzerland, South Africa, Taiwan, Cambodia, Thailand, Malaysia, Indonesia, Turkey, and Venezuela.”
See Also: The $5 Billion Copper Trap: How One ETF Got Burned By Trump’s Surprise Tariff Move
Yet, the market response was underwhelming, with S&P 500 futures “down a mere 10 points,” which the post attributes almost entirely to “Amazon’s weak earnings results.”
It says that in April, when the “Liberation Day” tariffs were first announced, such a move would have sent the S&P 500 lower by 3% or more.
The post says “the trade war has lost all credibility” in the market, and that it has lost the “shock effect” that it had a couple of months ago.
Why It Matters: This could be seen as a fallout of the “TACO Trade” meme, or “Trump Always Chickens Out,” where investors buy equities right after Trump makes a tariff threat, knowing fully well that he will eventually back out.
Economist Peter Schiff recently called this “a classic paradox,” since markets not reacting to Trump’s tariffs, because they expect him to “chicken out,” will eventually lead him to follow through on his threats.
“Investors assume Trump will cancel the August 1 tariffs before they kick in, so stocks aren’t selling off,” he says, but since there isn’t a dramatic market response to this, “Trump won’t chicken out again.”
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