Markets may feel a bit steadier, but don’t mistake this moment for stability. After the recent chaos, investors are breathing a little easier. But, I wouldn’t say we’re out of the woods. More likely, we’re experiencing a temporary reprieve.
President Trump’s recent 90-day pause of his so-called “reciprocal tariff” plan was his first sign of retreat. Stories are now floating around that he might just lower tariffs on China – from ridiculous levels to merely too high. And, he has also signaled a willingness to talk to Chinese President Xi, but only if he calls him first. Adding to the sense of calm, Trump has also suddenly decided to tone down his antagonism toward Federal Reserve head, Jerome Powell. This was just days after calling him a “major loser” on social media.
Of course, none of these reversals were rolled out as a formal shift in policy. Instead, they’ve come in the form of hints, rumors, offhand remarks and social media posts – leaving everyone to decipher the White House’s true intentions in real time. These childish guessing games have tangible, economic consequences.
The markets’ sense of relief started when Treasury Secretary Scott Bessent and Commerce Secretary Howard Lutnick reportedly found a way to literally sneak into the Oval Office. Their goal was to get President Trump to at least pause his new tariff “policy.” The sneaking around was apparently necessary to get Trump’s influential trade adviser, Peter Navarro, out of earshot. Their clandestine effort smacks as a desperate maneuver. Moments later, Bessent and Lutnick waited in the room while President Trump walked back his tariff plan via a social media post. The mere image of this intervention is unsettling.
The policy in question – vaguely defined “reciprocal” tariffs – was never truly about reciprocity. Instead, it relied on a crude formula that no serious economist could defend. This entire episode highlights a governance style that appears impulsive, unthoughtful and reactive. Business leaders are left to guess what policy will look like a week from now. It has layered on a level of uncertainty that risks a recession.
Markets can handle policy changes. They can even handle reasonable unpredictability. But, when rules shift with little notice and policies lurch between extremes, the trust that underpins our markets erodes. The notion that Bessent and Lutnick are holding back the erosion of terrible decision making is concerning, to say the least.
While the “adults in the room” appear to have taken charge – for now – it’s unclear how long it will last. For this reason, now might be a good time to review your portfolio. If the past month has prompted feelings of regret for not paying closer attention to your investments, this period of calm might be a second chance. Because, in this environment – and with the current occupant of the Oval Office – it’s rarely about if the tone will change, but when.
