Trump Tariff Threat Postponed, For Now

We’re learning that President Trump signed a measure directing the U.S. Trade Representative and Commerce secretary to propose tariffs on a country-by-country basis with the intent to rebalance trade relations.

Rather than the immediate or even near-term impact many expected, including ourselves, it’s a process that could take weeks or months, which means there is no clear date for when they would take effect. Much like we saw when Trump extended tariff implementation for Mexico and Canada, the market is breathing a sigh of relief on Thursday afternoon. Indications are these reciprocal tariffs could start as soon as April.

Trump also told reporters that he would enact import taxes on cars, semiconductors, and pharmaceuticals in addition to the reciprocal tariffs. This means there is more to come, in addition to potential reprisals in response to Trump’s reciprocal tariffs.

At the same time, the president’s decision not to implement tariffs right away could be seen as an opening bid for negotiation. We’ve shared that Trump likes to keep his options open and the announcement of proposed tariffs could be viewed as a way to bring others to the negotiating table. Giving credence to that line of thinking, Trump shared he’s more than happy to lower tariffs if countries want to pare their levies or remove other trade barriers.

Once again, we’ll have to see how things develop on this front and what potential impacts are to come. We should remember that Trump did impose a new 10% across-the-board tariff on certain goods imported from China and China retaliated with a 10% to 15% tariff on oil, liquefied natural gas, farm machinery and certain other imports from the U.S.

However, with this near-term threat of a much wider array of tariffs off the table for now and the market adjusting its rate cut timing expectations following Wednesday's hot January CPI report and Thursday's hot January PPI report, we’re reconsidering the Portfolio’s position in its inverse ETFs. The latest per the CME FedWatch Tool shows one rate cut in October, which matches our call for the Fed to deliver only one cut in late 2H 2025. When we added them, we shared we would review their viability as new information became available and that would dictate their length of time in the Portfolio.

We also recognize shares of Lockheed Martin LMT have moved below our panic point, and in keeping for when that happens, we will be taking another hard look at the shares. That includes not only the rising backlog levels at Lockheed, but also investor sentiment about defense companies as Elon Musk and others continue to question and push back on defense spending. While we like to focus on tailwinds, we have to be mindful of headwinds forming or gaining strength that can offset the tailwinds.

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At the time of publication, TheStreet Pro Portfolio was long LMT.