The tariff uncertainty isn't getting any better in markets: Chart of the Week
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A whipsaw stretch of market action has featured the worst week for the S&P 500 since 2020, followed by the best day for the index since 2008.
Sifting through the ups and downs, the stock market narrative feels relatively unchanged. But if anything, the outlook might be getting cloudier.
Since Trump announced the largest increase in US tariffs in a century , sending the stock market into a tailspin , the estimated effective US tariff rate has only increased.
On Wednesday, Trump announced a 90-day delay on the lion's share of his "reciprocal" tariffs. But he also boosted tariffs on imports from China to 145%.
On April 3, the Yale Budget Lab had estimated the effective US tariff rate was 22.5%. Now, it estimates the US effective tariff rate is 27% .
The movement in the chart above is at the center of the market's biggest problem right now: The rules of the game keep changing. For now, they're pushing the tariff rate higher. Later, they could push it lower. But to some extent, that's neither here nor there. The point is it's impossible to play a game if you don't know when the rules might change or goalposts might be moved.
So, for now, investors are left waiting to see which way the rules move next, leaving tariffs in the driver's seat of the stock market action.
Tariff uncertainty may have peaked, but as Piper Sandler chief investment strategist Michael Kantrowitz noted in a video sent to clients on Friday, we have another "higher for longer" situation on our hands, with lower-but-still-uncomfortably-high rates and uncertainty.
"So we're likely to continue seeing a lot of uncertainty in market volatility because high tariffs is still a problem for the economy," Kantrowitz said.
For both markets and the economy, the issue with the latest updates is that an arbitrary 90-day delay is just that: a delay that postpones any conclusion and adds to the uncertainty that's crippling consumer and business confidence . The rising fear at the moment is tariffs could slow growth and push the US economy into recession. Renaissance Macro's head of economics Neil Dutta maintained his call for a "relatively brief" recession following Trump's tariff delay.
"We have prolonged uncertainty, which will weigh on investment," Dutta wrote on Wednesday. "Uncertainty means consumers save more, which is [bad] for spending."