Trump's latest tariff salvos leave markets unfazed: 'Sit still and do nothing,' analysts say

• Trump reimposed tariffs at 15% under Section 122 after the Supreme Court invalidated his prior IEEPA-based tariffs, but analysts note this new authority is temporary and less flexible than previous measures
• Market reaction was muted with Asia stocks mostly higher, U.S. dollar down 0.3%, and Treasury yields unchanged, while Bitcoin fell over 5% reflecting its high-beta liquidity characteristics
• Top strategists recommend a 'sit still and do nothing' approach, arguing that Trump's pattern of using tariffs as negotiating leverage (dubbed 'TACO: Trump Always Chickens Out') makes policy statements non-durable

Market Summary: Trump Tariff Increase Fails to Rattle Investors

Key Developments

President Trump raised global tariffs to 15% from 10% following a Supreme Court ruling that struck down levies imposed under the International Emergency Economic Powers Act (IEEPA). The new tariffs were implemented under Section 122 as a temporary replacement, while Section 301 and 232 duties on steel, autos, and China remain intact.

Market Reaction

Markets largely ignored the tariff escalation:

• Asian stocks traded mostly higher
• U.S. dollar index declined approximately 0.3%
• Treasury yields remained relatively unchanged
• Bitcoin fell over 5%, though analysts consider this normal volatility for the cryptocurrency
• Bitcoin is down 26% year-to-date and 47% from its October high above $125,000

Expert Analysis

Analysts overwhelmingly recommend patience and inaction. Ed Yardeni of Yardeni Research noted markets learned that "the economy is remarkably resilient" to tariff volatility. Hugh Dive of Atlas Funds Management advised investors to "sit on hands and do nothing, this is just noise."

Experts view Trump's tariff approach as primarily a negotiating tactic, referencing the "TACO" phenomenon (Trump Always Chickens Out). Yardeni characterized the Section 122 approach as a "rubber mallet" versus the previous "sledgehammer," noting it's temporary and less flexible for country-specific targeting.

Investment Implications

While most strategists advocate maintaining current positions and focusing on earnings, Interactive Brokers' Steve Sosnick suggested investors could consider reducing U.S. equity exposure in favor of global companies less vulnerable to trade disruptions. Persistent uncertainty could impact corporate planning and global trade flows, though immediate structural damage appears limited.