The US stock market is under pressure, what will Trump do?

Trump released positive signals on Thursday, announcing a postponement of the tariffs on Mexico until April 2, but U.S. stocks still did not respond favorably, with the Nasdaq falling nearly 3% overnight into correction territory, and the chip and AI sectors collapsing across the board. Over the past month, the Nasdaq has already dropped more than 7%.

Does this indicate that under the strong pressure of U.S. stocks, Trump is changing his tariff strategy?

Nomura Securities believes that Trump's attitude towards tariffs does not seem to be significantly influenced by fluctuations in U.S. stocks. Nomura's analyst team led by Jeremy Schwartz released a research report this week, reviewing Trump's performance during his first term, noting that despite the U.S. stock market experiencing one of its worst performances in a non-recession year in 2018, Trump still chose to escalate the trade war. This indicates that Trump has a high tolerance for declines in the stock market.

Trump's own statements seem to validate Nomura's view. According to Xinhua News Agency, Trump announced on Thursday that the 25% tariff on Mexico would be postponed until April 2. During a speech at the White House on Thursday, he stated that the decision to delay tariffs on trade with Canada and Mexico under the USMCA is unrelated to stock market trends, and he "hasn't even looked at the market." The real culprit behind the stock market decline is "globalists."

However, the report also suggests that the pressure from the U.S. stock market or the U.S. real economy may force Trump to make concessions in certain situations, but such concessions may not be swift.

In the first two months of Trump's second term, his tariff actions have already far exceeded the scale of his first term. The Trump administration has not only imposed tariffs on traditional trading partners like Canada and Mexico but has also taken more aggressive measures against other economies such as the European Union.

However, from Nomura's perspective, Trump's tariff objectives seem unclear. The report mentions that in some cases, tariffs are used as a negotiating tool aimed at forcing trade partners to concede. However, during his second term, Trump increasingly views tariffs as a means to adjust trade deficits or increase government revenue, indicating that he may be willing to maintain high tariff policies in the long term. This dual logic complicates predictions about Trump's actions.

The Nomura team believes that although market pressure may be the most direct way to prompt Trump to concede, he is more inclined to maintain a tough stance in trade conflicts. Therefore, the easing of the trade war in the short term may rely more on feedback from the real economy rather than stock market performance.

The agency finally predicts that Trump is unlikely to fully implement all of his threatened tariff measures. For example, he has hinted at possible concessions on tariffs against Canada and Mexico. Nevertheless, considering Trump's negotiating style, the escalation and easing of the trade war may alternateDespite the market pressures, Trump is more likely to choose to "tough it out" with the decline of U.S. stocks and inflationary pressures, rather than quickly resolving trade conflicts.