Buffett calls tariffs "acts of war" as US stock market volatility intensifies
Buffett stated that tariffs are "acts of war," which may exacerbate inflationary pressures and lead to turmoil in the U.S. stock market. Recently, U.S. stocks have fallen, with the Nasdaq at one point dropping over 3%. Analysts pointed out that the tariff policy of the Trump administration has become a core agenda, market sentiment has deteriorated, and only 8% of the S&P 500 index's constituent stocks have reached a new 52-week high. Compared to 2016, market performance is weak, and the trend of economic slowdown is evident. The White House's decision to impose a 10% tariff on Chinese goods has shattered market expectations for trade stability
According to the Zhitong Finance APP, "stock god" Warren Buffett recently stated that tariffs are a form of "warfare" and may further exacerbate inflationary pressures. A series of recent news has impacted the market, leading to deteriorating investor sentiment, with U.S. stocks falling again on Monday, and the Nasdaq briefly dropping over 3%.
After the presidential election, many market analysts believed that the Trump administration's policies would primarily focus on deregulation and promoting economic growth, rather than triggering trade conflicts. However, it has proven that tariffs are becoming one of the core elements of its policy agenda. This shift has led to the market giving back post-election gains, with U.S. stock indices returning to levels seen in early November last year.
Dave Rosenberg, chief economist at Rosenberg Research, stated, "From a market perspective, the 'honeymoon period' between Trump and the market has ended." He pointed out that currently only 8% of the S&P 500 constituents have reached new 52-week highs, compared to 25% in early November last year. He further noted, "The major U.S. stock indices have made almost no progress since election day, which starkly contrasts with the strong rally following Trump's election in 2016. The U.S. economy is not accelerating; rather, it is slowing down."
This trend is not surprising. Looking back at 2018, during Trump's first term, the uncertainty surrounding trade conflicts led to a significant drop in the S&P 500 index. Foreign media also warned last December that the market might face a reality check after the presidential inauguration. Now, the market is digesting this impact, with the S&P 500 experiencing a significant correction in February.
Jon Harrison, an analyst at TS Lombard, pointed out that the Trump administration initially adopted a relatively mild strategy regarding the new round of tariff policies, such as delaying implementation and selective imposition, which led investors to mistakenly believe that some form of negotiated compromise would ultimately be reached. However, a series of sudden tariff and trade news last week shattered this "complacency" in the market.
The White House recently decided to impose an additional 10% tariff on Chinese goods and advance a 25% tariff plan on goods from Mexico and Canada, completely crushing market expectations for trade stability. This decision has also prompted investors to reassess the severity of potential 25% tariffs the Trump administration may impose on the European Union.
As uncertainty surrounding trade policies continues to escalate, the market is facing multiple challenges. Evercore ISI strategist Julian Emanuel stated, "The ongoing negotiations of Trade Conflict 2.0 and the uncertainty it brings are significant disadvantages for the S&P 500 index." Meanwhile, consumer confidence indices are beginning to show warning signs, consumer spending is slowing, and the risk of large-scale government layoffs is rising, all of which could weigh on economic growth.
The U.S. job market is also beginning to show cracks. Emanuel noted that the rise in initial jobless claims in the U.S. last week is the first sign of economic weakness in recent "hard data."
Dennis DeBusschere, an analyst at 22V Research, stated that the current series of policy adjustments could trigger a negative feedback loop in the economy: "If the current tariff threats ultimately materialize, consumer demand may be impacted in an already slowing U.S. economy, further exacerbating the risk of economic recession."Despite the market potentially remaining under pressure in the short term, investors do not need to completely give up on U.S. stocks. Evercore's Emanuel still expects the S&P 500 index to rise to 6,800 points this year.
DataTrek analyst Nicholas Colas emphasized that investors should focus more on long-term trends: "'American exceptionalism' means that U.S. stocks still have a competitive advantage in the long run, but this does not guarantee that the S&P 500 index will outperform the global market in every quarter."