Donald Trump tariffs a `slow burn` for Wall Street, likely to hit US economy hard
The reciprocal tariffs imposed by US President Donald Trump are a "slow burn" for Wall Street, as they rarely trigger an immediate crisis - but over time, they warp markets, squeeze consumers, and invite retaliation, according to a new report.
Investors and policymakers alike would do well to remember that just because the storm isn’t here yet doesn't mean it isn't coming, says Zoya Najeeb in an opinion piece in One World Outlook.
"While Wall Street pours champagne over record-high stock indexes, the US economy is quietly swallowing a bitter pill: tariffs. The same markets that panicked in April are now shrugging at the reality of a new trade regime - one that could be far costlier than investors seem willing to admit," the article highlighted.
White House press secretary Karoline Leavitt recently cheered $29 billion in tariff revenue collected in July, with Commerce Secretary Howard Lutnick predicting $50 billion a month soon.
"But tariffs are taxes by another name, and this is a tax hike on Americans at a time when the bottom half of the income ladder is already straining," according to the write-up.
Caterpillar Inc., an American construction, mining and other engineering equipment manufacturer, estimates the new tariffs will cost it up to $1.5 billion this year - half a billion in the current quarter alone.
"Yet its stock barely flinched, thanks to investor faith in unrelated booms in AI data centres and infrastructure spending. It's a neat metaphor for today's K-shaped economy: Wall Street soars while Main Street watches grocery bills spike and more households turn to ‘buy now, pay later' plans just to make ends meet," the report highlighted.
The AI gold rush may be propping up the stock indexes, but strip out tech and the S&P 500 is flat.
"Even Warren Buffett - hardly a doomsayer - has been quietly selling for 11 straight quarters, amassing a $344 billion war chest to deploy when prices fall. He's betting on a downturn, even if the rest of the market isn't," said the report.
In the meantime, former US House Speaker Paul Ryan has warned that "choppy waters are ahead because I think they're (tariffs) going to have some legal challenges."
