Previously, markets underestimated tariff risks, believing President Donald Trump would retract his measures as he had before. Stocks soared to new highs following the initial downturn from his "Liberation Day" tariffs. However, Trump now claims these highs reflect positive reception of tariffs, including proposals for increased rates up to 20%. With letters to trade partners detailing potential tariffs by August 1, doubts about Trump backing down are growing as stock values decline and skepticism about the TACO trade emerges.
President Donald Trump is now pointing to record-high stock markets as evidence that his tariffs are being well received, despite earlier market dismissals of tariff risks.
Markets previously dismissed tariff risks, believing Trump would retreat from aggressive measures. Now, skepticism is rising as he increases proposed tariff rates significantly.
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