Wall Street forecasters suggest that stocks may experience further declines due to tariff concerns before President Donald Trump considers altering his trade policy approach. Trump has expressed comfort with the “disturbance” caused by his administration’s trade policies. This stance marks a shift from his first term when market reactions often influenced his decisions. Market strategists believe that a significant deepening of the stock sell-off might be necessary for Trump to reconsider his tariff strategy.
This week, new tariffs on Canada, Mexico, and China contributed to a sharp market drop amid fears that protectionist policies could hinder economic growth. According to BCA Research, Trump is unlikely to ease tariffs for investors unless the market risks entering a bear market. The firm suggests that stocks could fall another 15%, bringing the S&P 500 down approximately 20% from its mid-February peak, before Trump changes course.
Matt Gertken, chief geopolitical strategist at BCA Research, noted that Trump’s tolerance for market volatility signals his commitment to tariffs. “Trump might be willing to destroy his party in pursuit of his historical legacy and geopolitical visions, but at least prior to the midterm election, we would bet that Trump will start to make trade concessions when the S&P 500 is down by around 15%. That can happen very quickly,” Gertken stated.
Michael Landsberg, chief investment officer of Landsberg Bennett Private Management, echoed this sentiment, suggesting that the sell-off has further to go. He advised against bargain hunting in hard-hit sectors like technology, citing ongoing volatility in both stock and bond markets.
Despite a slight uptick following an announcement delaying auto tariffs, markets remain significantly down. Commerce Secretary Howard Lutnick mentioned the possibility of a compromise with Canada and Mexico on tariffs. However, the White House has not responded to the market nearing a key threshold identified by Bank of America.
In his address to Congress, Trump reaffirmed his dedication to tariffs, stating, “Tariffs are about making America rich again and making America great again. And it’s happening, and it will happen rather quickly. There’ll be a little disturbance. We’re OK with that, it won’t be much.”
— news from Business Insider