"Markets have come to realise that Trump is the TACO president"

Markets have come to realise that Trump is the TACO president. His rhetoric doesn’t match ‘the cards’ that he’s got. The US aren’t in a position to whack great tariffs on trading partners, especially when Trump wants low inflation so he can get his desired rate cuts. Tariffs will do the opposite.

I suspect this is yet more bluster from Trump. Past tariff threats mostly fizzled out once markets reacted badly and foreign governments, apart from the UK, stood firm. If he does impose higher tariffs, it could hit sectors like tech and manufacturing and spark retaliation, but for now, I’d treat it as more hot air than real policy.

This isn't like haggling £150 off a second hand car. The credibility of the Trump administration is at risk here. We have threats, tariffs, delays, roll backs but if there's one constant it's that Trump always chickens out. This means we may reach a point where the markets ignore Trump altogether as he's become so erratic. Nobody knows where they stand. Trade negotiations typically take years as there are so many interested parties all wanting their say. There are huge trade-offs and so trying to rush these deals through risks unintended consequences.

Trump’s threat to return to his ‘Liberation Day’ tariff levels could reignite market volatility, increase inflation and heighten recession risks, with US and global GDP growth potentially slowing further. Trading partners are likely to intensify negotiations to avoid higher tariffs, but countries like China and the EU may retaliate if talks falter, while others like Thailand and Nigeria may seek alternative trade networks, potentially isolating the US. China, Canada, Mexico, and the EU face the greatest trade exposure, while US consumers, retailers, and farmers are at risk domestically. The threat of tariff reversion keeps markets and trading partners on edge, with outcomes hinging on negotiation progress and potential legal challenges.