Greg Valliere, the Chief U.S. Policy Strategist for AGF Investments shared his insights on President Donald Trump‘s tariff strategy and its potential repercussions on the market.
What Happened: On Tuesday, Valliere weighed in on Trump’s recent tariff implementation and its potential impact on the market and economy in a discussion with BNN Bloomberg. He also mentioned Trump’s speech to Congress.
Valliere expressed his concerns about the tariff strategy, stating that it “makes no sense” to him. He also mentioned the possibility of more tariffs being implemented on April 2, and a cycle of retaliation that could continue. According to Valliere, Trump is aware of stock market reactions, and if market performance worsens, his administration may reconsider certain economic strategies. “Secretary of the Treasury, Scott Bessent, who knows the market well, could tell Trump, this is not a real great idea”, stated Valliere.
The policy strategist also speculates the Trump administration could be aiming for lower Treasury yields to facilitate refinancing, though it’s unclear if this is intentional. “It is an unintended consequence that interest rates are going to come down,” indicated the policy strategist.
Finally, Valliere stated that with a potential government shutdown looming, Trump may be using economic policies, including tariffs, to divert attention from more pressing domestic issues. “So it is possible that Trump may be seeking the shelter from other stories that might not be quite as negative for him,” opined the strategist.
Why It Matters: Trump’s tariff strategy has been a topic of intense debate, with many questioning its potential impact on the economy and market. Reports suggest that the strategy could escalate tensions and potentially lead to a government shutdown. Valliere’s comments add to this discussion, highlighting the potential economic impact and the need for a careful approach moving forward.
Valliere also touched upon the possibility of a budget crisis, tensions surrounding the Russia-Ukraine war, and layoffs from Tesla CEO Elon Musk-led DOGE’s cost cutting measures, adding to the complexity of the current economic situation. He emphasized the importance of monitoring the market and adjusting strategies accordingly.
The market witnessed a knee-jerk reaction from investors amid a massive sell-off as the trade war escalated. The S&P 500 (NYSE:SPY) fell 1.22% while the NASDAQ Composite (NASDAQ:QQQ) edged 0.35% lower on Tuesday.
However, Scott Bessent shrugged off market worries and clarified that the President aimed at rebalancing the economy and small businesses. “Over the medium term, which is what we’re focused on, it’s a focus on Main Street. Wall Street’s done great, Wall Street can continue to do fine, but we have a focus on small business and consumers,” stated Bessent.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
