The ongoing tensions in the U.S.-China tariff war are fueling the risk of recession and a bear market for major economies around the world. As of the time of writing, the situation between the two nations is as follows; Trump has slapped China with a total of 145% tariffs so far, and China keeps retaliating, with the latest tariff figure standing at 125%. Experts predict that the likelihood of a recession is rising with each passing day. However, Treasury Secretary Scott Bessent tried to pacify the critics by saying that more than 75 countries had lined up to start trade negotiations with the U.S.
U.S. stock markets rattled yesterday, following a strong rally on April 9, when Trump announced a 90-day pause on most reciprocal tariffs. The S&P 500 index (SPX) slid 3.46%, the Dow Jones Industrial Average (DJIA) dropped 2.50%, and the tech-heavy Nasdaq (NDX) ended the day down 4.31% on April 10. Meanwhile, the 10 Year Treasury yields fell slightly to 4.44%, following cooler-than-expected inflation figures for March.
Here’s What Experts Are Saying About the Tariffs
Trump’s 90-day tariffs pause exempted Chinese imports and did not apply to imports from Mexico and Canada, the top three U.S. trade partners. Imports from Mexico and Canada remain subject to 25% tariffs unless they comply with the US-Mexico-Canada Agreement (USMCA). These trade tensions have prompted Goldman Sachs (GS) to estimate a 45% chance of a recession in the U.S.
Adam Hetts, global head of multi-asset at Janus Henderson, said yesterday, “Recession risk is much, much higher now than it was a couple weeks ago.” Meanwhile, Home Depot (HD) co-founder Ken Langone is the latest to blast Trump’s reciprocal tariffs, which includes 46% import duties on Vietnam and 34% tariffs on China. In an interview with the Financial Times, Langone said, “I don’t understand the goddamn formula… I believe [Trump’s] been poorly advised by his advisers about this trade situation — and the formula they’re applying.”
Trump Sees Hope of a China Deal
Beijing’s retaliatory efforts have angered the U.S. administration, as China is the only country to counteract with such heavy tariffs. However, President Trump has shown hope that a deal with China could soon be on the table, while still believing that China has “really taken advantage” of the U.S. for a long time. The President told reporters yesterday that the countries could get along very well and that he has high respect for Chinese President Xi Jinping. He is hopeful that the two countries could reach a solution which will be “very good for both countries.”
It is important to note that these tariff negotiations could prolong until June, since Trump has set a 90-day period for the talks. Until then, the markets are expected to remain jittery, with the possibility of entering a bear market.
Is SPY a Good Buy Right Now?
Analysts have a Moderate Buy consensus rating on the SPDR S&P 500 ETF Trust (SPY) based on 412 Buys, 84 Holds, and eight Sell ratings. Furthermore, the average SPY price target of $616.20 per share implies 17.5% upside potential. Year-to-date, SPY stock has lost over 15%.
