Weekly Commentary: The Return Of Tariffs

2025-07-12 03:00:41 ET

Speculative markets are inherently short-term focused, with notably short attention spans. President Trump is increasingly fearless. Stocks have moved on from tariff worries, while the President is determined to push his tariff policies to precarious new extremes. This predicament turned more pressing this week. Bloomberg: "Markets Embolden Trump on Tariffs, Stoking Fear of Overreach" and "Markets So Unfazed By Tariffs That It's Making Trump Bolder." Axios: "Wall Street May be Enabling Tariff Policy." FT: "The Return of 'Tariff Man': The Week Donald Trump Revived the Global Trade War."

In a Tuesday interview with Fox's Larry Kudlow, leading Fed Chair candidate Kevin Warsh stated definitively: "Tariffs are not inflationary." That's about when Japan and South Korea received letters notifying them of the 25% tariff rates on exports to the U.S. Later that afternoon, the President announced a 50% tariff on copper imports. For good measure, he threw in an additional threat of possible 200% pharmaceutical tariffs. On Wednesday, more tariff letters: Philippines (20%), Algeria (30%), Iraq (30%), Libya (30%), Sri Lanka (30%), Brunei (25%) and Moldova (25%). "Trump Escalates Canada Trade Fight with 35% Tariff Threat." But the big tariff letter bomb was addressed to Brasilia.

July 10 - Wall Street Journal (Gavin Bade and Marcus Walker): "President Trump's threat for a 50% tariff on Brazilian imports expanded his use of punitive duties over matters that have nothing to do with trade, breaking with more than a half-century of global economic precedent. Trump cited the trial of the president's close political ally, former Brazilian President Jair Bolsonaro, as the rationale for new tariffs set to take effect Aug. 1 on imports from the largest economy in Latin America. It is one of the latest-and perhaps most brazen-examples of Trump using tariffs as a cudgel for political priorities outside of trade."...

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