Trump to Slash China Tariffs to 60% in Coming Weeks, Says Piper Sandler

• Piper Sandler strategist Michael Kantrowitz believes markets have been buoyed by expectations of reduced China tariffs (currently at 145%), but investors will soon demand actual policy changes rather than just positive rhetoric.
• Kantrowitz describes the current economic situation as “suppression” rather than recession, noting that uncertainty is hampering activity despite stable interest rates and multi-year low oil prices.
• Despite concerning signals in manufacturing and services price indices (near 70 and 65 respectively), Kantrowitz doesn’t anticipate Federal Reserve policy changes as officials and investors alike await clearer economic signals.

Piper Sandler chief investment strategist Michael Kantrowitz believes that while the broader market is attentive to non-China trade deals, investor focus remains primarily on potential reductions in US tariffs against China. During a recent CNBC appearance, Kantrowitz noted that markets have been propelled upward by President Trump’s suggestions that tariffs on Chinese goods, currently at 145%, could be reduced despite his campaign rhetoric about potential 60% rates.

“I think we’re gonna be going from just hearing is believing to wanting to see action to believe,” Kantrowitz stated, suggesting investors will soon require concrete policy changes rather than merely positive rhetoric. He pointed out that despite emerging signs in shipping and cargo data, the broader economic impact of trade tensions hasn’t fully materialized in consumer retail experiences or corporate earnings guidance.

Kantrowitz characterized the current economic situation as an “economic suppression” rather than a recession, describing it as “a suppression of economic activity due to uncertainty about the future.” He emphasized this distinction by noting the absence of traditional recession triggers like interest rate shocks or spiking oil prices—in fact, he highlighted that oil prices are at multi-year lows and interest rates have remained relatively stable.

Regarding Federal Reserve policy, Kantrowitz doesn’t anticipate any significant shift despite mixed economic signals. While job openings have decreased and core PCE inflation has moderated, manufacturing and services prices paid indices have climbed to concerning levels near 70 and 65 respectively. However, unlike similar readings in early 2022, today’s elevated price metrics aren’t accompanied by rising oil prices, potentially giving the Fed more flexibility.

As trade discussions continue, Kantrowitz believes both investors and policymakers are in a similar position—waiting to see whether economic reality will match the positive signals from the administration’s trade rhetoric or if economic data will deteriorate in the coming months.

WallStreetPit does not provide investment advice. All rights reserved.

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