Tariffs escalated, then paused, sparking a market surge last week. Here’s my take and what I’m watching next.
What Happened Last Week
The U.S. imposed a universal 10% tariff on nearly all imports and a 34% reciprocal tariff on Chinese goods. China responded by raising tariffs on U.S. goods to 125%. In turn, the U.S. increased tariffs on Chinese imports to an effective 145%. This is the highest tariff rate ever placed on a major trading partner.
The White House then announced a 90-day pause on most new tariffs for countries other than China and exempted key electronics like smartphones and computers. This move sparked a powerful market rebound, with the S&P 500 surging 5.7% for the week—its best performance in years—after a sharp drop the week prior.
Treasury yields surged, with the 10-year closing at 4.48% and the 30-year at 4.85%, reflecting higher borrowing costs and adding to market volatility.
March CPI cooled to 2.4% year-over-year (Core CPI: 2.8%), and PPI rose 2.7%. While inflation appears to be easing, most expect tariffs to push prices higher in the coming months.
My Take
The quick rise in tariffs and the 90-day pause show one thing: China is the main target. We are now in a trade war.
The pause helped last week’s market rebound, with investors liking the temporary relief. The 90-day pause offers a chance for renewed talks among countries, with some suggesting “zero-for-zero” tariff deals. Still, volatility and uncertainty are likely to persist as the U.S. and China remain locked in a standoff.
Recent inflation data is encouraging, but it may not reflect the full impact of these new tariffs. Many expect inflation to worsen due to the tariffs, and I'm not ruling out that possibility.
Tariffs are shifting consumer sentiment, which could create investment chances abroad. For now, it's best to stick with U.S. stocks. Still, I’ll keep an eye on international markets and be ready to jump on good opportunities if they appear.
This Week’s Watchlist
Tariff developments: New headlines could quickly shift market direction.
Earnings season continues: I'll watch for any signs that higher costs are affecting company profits.
Please reach out if you want to discuss your portfolio or the current environment—I’m here to help you stay on track.
