U.S. tariffs on its major trading partners and Europe are all that the media talked about in the last three months. When might these threats end?
The constant changes in when tariffs come into effect are wreaking havoc for businesses. After the President declared tariffs against Mexico and Canada started on March 4, news circulated that President Trump would delay them another month. Ford Motor (F), General Motors (GM), and Stellantis (STLA) shares rallied in response.
Tariffs on aluminum and steel will still raise the cost of vehicles. Consumers already navigated through lower disposable income thanks to inflation. They are growing increasingly pessimistic about the economy.
Tariffs on Canada’s lumber will raise homebuilding prices. Fortunately, shares of PulteGroup (PHM) and D.R. Horton (DHI) formed a narrow trading range. Their shares rebounded on hopes that lower mortgage rates will increase demand. This demand would more than offset the headwinds of higher home-building prices.
Trading Ideas
Watch the U.S. dollar. The UUP and DXY exchange-traded funds are at prices not seen since before the U.S. elections last November 2024. Markets are expecting trade wars to hurt the U.S.
Watch the bond market. Yields are falling as investors sell equities and buy bonds. In addition, markets are watching out for the central bank to either hold or cut interest rates. That would strengthen bond prices.
