Key Points
- Universal tariffs above the minimum 10% are delayed 90 days, except for China which faces a 125% import tax starting April 10.
- The market reacted positively but uncertainty remains high, affecting investment and consumption decisions throughout the economy.
- We remain cautiously skeptical until the policy outlook stabilizes, but this is a positive step.
What Happened?
In a surprise policy shift, President Trump announced a 90-day delay in implementing the country-by-country tariff hikes initially set to begin on April 10, although the 10% universal tariff remains on schedule.
China is the exception and still faces a 125% import tax effective immediately on that date.
Markets rallied on the news, but we caution that it’s too early to celebrate. Uncertainty about enforcement, exemptions, and sequencing continues to weigh on the real economy.
Still a Mess Beneath the Surface
Despite the positive headlines, the underlying issues linger. Delaying tariffs without clarifying whether they’ll be reinstated—or replaced—makes it harder for businesses and households to plan.
Economic and policy certainty is a fundamental motivator for economic agents' decisions. If corporations can't read whether the tariffs are permanent or not, it is unlikely they will start building a factory that may or may not face cheap competition in the near future. Similarly, a household that is in the market for a new kitchen stove, will likely defer the purchase until knowing whether a China-made model will come with a 125% tariff or not.
The result is a slowdown in the economy.
Reshoring Narrative Loses Steam
To be clear, we think the announced tariff policy is extremely damaging to the US economy.
But regardless of our opinion, if tariffs are meant to trigger a wave of onshoring manufacturing, credibility is everything. A 90-day delay signals hesitation, not conviction—corporations won’t commit billions to long-lived U.S. factories unless they believe the policy will last.
China’s Consumer Inflationary Footprint
China accounts for 15%–20% of U.S. imports, but its goods are highly concentrated in consumer products: electronics, apparel, toys, household goods. These items hit store shelves directly, and a 125% tariff will show up fast in retail price inflation and filter into consumer sentiment indicators.
Final Thought
The delay is a step in the right direction. It reflects a welcome realization that the original tariff framework was too abrupt, too aggressive, and potentially economically damaging.
But this isn’t enough to change our stance yet. Until the administration signals a consistent, stable trade strategy, we maintain a cautious view on equities and continue to favor stocks of cash-rich balance sheets, operating in defensive sectors, and with high dividend distributions.
