2 weeks Ago By [email protected] (Anubhav Maurya)
Updated April 15th 2025, 09:27 IST As market expert Ajay Bagga explains, these shifts reflect the administration's efforts to adjust policies in response to economic pressures. The United States has experienced significant changes in its trade policies under President Donald Trump , leading to notable shifts in market dynamics. One of the most impactful changes has been the reversal of reciprocal tariff discounts and the strategic easing of tariffs on critical goods.
As market expert Ajay Bagga explains, these shifts reflect the administration's efforts to adjust policies in response to economic pressures. Reciprocal Tariff Discounts The 50% discount on reciprocal tariffs, initially introduced as a temporary measure, was quickly reversed when U.S.
Treasury markets signalled discontent. According to Bagga, “The 50% Discount offer of Reciprocal Tariffs was hastily reversed as US Treasury markets signalled their disapproval. A 90-day breather was allowed, with markets factoring in a longer pause and no immediate return to the Liberation Offer of 50% Discounts.
” Reducing Tariffs on Essential Goods Among the most significant moves in Trump’s trade policy was the reduction of tariffs on essential products like electronics and semiconductors. These changes were critical for industries that rely on these imports, benefiting sectors such as consumer technology and industrial production. Bagga notes, “Electronics, semiconductors, solar panels et al.
, making up more than $350 billion of essential inputs into the US consumer and industrial juggernaut, were freed from Reciprocal tariffs, with even Chinese imports tariffed at 20% instead of 145%.” The flexibility displayed by the administration, often referred to as the “Trump Put,” allowed for necessary course corrections when the economic pain became too great. Bagga emphasizes that, “This points to flexibility and a level of pain beyond which the Trump Put comes into play again.
” Relief for the Auto Industry Another sector that has garnered attention due to the trade policy shifts is the automotive industry. The auto sector, currently facing a 25% tariff on imports and potential tariff hikes on auto parts in May, has experienced significant strain. However, President Trump recently hinted at possible relief for the beleaguered industry, signalling that tariff reductions may be on the horizon.
Bagga comments, “On Monday, Trump hinted at relief to the beleaguered Auto industry as well, which is subject to 25% tariffs on auto imports and is facing May tariffs on auto part imports.” Although future tariff hikes loom over specific sectors, such as pharmaceuticals and semiconductors, the market responded positively to the prospect of relief for industries like autos. Steel and Aluminum Tariffs Trump’s administration also faced criticism for high tariffs on steel and aluminium, which have affected new manufacturing efforts in the U.
S. These materials are crucial for the production of essential goods, including cars, homes, and factories. Bagga highlights the importance of providing relief to industries that rely on these materials, “New factories cannot be competitive with 25% tariffs on steel and aluminium, which the US makes in very small quantities.
Someone will wake up to this and hopefully, some relief will come on these, provided the end use is new houses or new factories or new autos.” Also Read: Stocks To Watch: Adani Ports, HCL Tech, Zydus Lifesciences, NHPC, GAIL India, IREDA And Others The administration’s stance on steel and aluminium tariffs is clear: these materials should be used for productive and essential purposes, rather than for frivolous pursuits. Bagga humorously reflects this point, stating, “No use of steel and aluminium in any frivolous pursuits (still trying to figure out any), otherwise you will be taxed 25%.
” China’s Position in the Changing Trade Landscape China has emerged as a notable beneficiary of the recent trade policy changes, particularly with the reduction in tariffs. “The biggest smile is from China as it gets to export $150 billion plus of consumer and intermediate goods at 20% instead of 145%,” Bagga observes. Resilient U.
S. Economy Amidst Market Uncertainties Despite concerns about a potential recession, the U.S.
economy has shown resilience, with strong job numbers and controlled inflation. Consumer spending, though cautious, has remained steady, and fears of an impending economic downturn have not materialized. Bagga notes, “Meantime, conspiracy theorists have been proved wrong as US yields rose (higher debt payouts), US dollar fell, and no recession in sight (strong job numbers, inflation in control, US consumer fearful but not cutting back on consumption).
” This stability, coupled with optimism from retail investors, has helped maintain confidence in the U.S. stock market, even amidst significant volatility.
In fact, “US retail investors poured in more than $5 billion into US stocks last week through the roller coaster,” indicating a continued belief in market opportunities. Market Fluctuations and Strategic Gains While retail investors have remained optimistic, hedge funds have faced challenges. Regardless of their positions, both long and short hedge funds experienced significant losses due to unpredictable market moves.
However, large financial institutions like JP Morgan and Goldman Sachs have managed to capitalize on the volatility, generating significant profits through strategic trading. “JP Morgan and Goldman showed massive trading profits, using the volatility to generate outperformance,” Bagga observes. A Call to Action for Investors In the face of market volatility, Bagga encourages investors to stay optimistic and embrace opportunities.
“Get up and make money. No fear,” he advises, reinforcing the idea that, despite uncertainties, there are always opportunities for those willing to take them. Disclaimer: The views expressed in this article are purely informational and Republic Media Network does not vouch for, promote or endorse any opinions stated by any third party.
Stock market and Mutual Fund investments are subject to market risks and readers are advised to seek expert advice before investing in stocks, derivatives and Mutual Funds. Published April 15th 2025, 09:25 IST.
