Intel stock spikes after report of possible US government stake
Investing.com -- Markets may be inadvertently giving President Donald Trump the green light to escalate tariffs, according to analysts at Wolfe Research.
Despite a barrage of new trade threats this week, including a 35% tariff proposal on Canada and potential increases to the baseline tariff rate, stocks continue to hit record highs.
"Trump’s explicit argument tonight that a 15–20% baseline is manageable because ’the tariffs have been very well-received... the stock market hit a new high today’ underscores our longstanding argument that market stabilization will serve as permission to push harder," Wolfe wrote.
The firm noted that Trump has now sent letters to 23 countries threatening new tariffs worth roughly $60 billion annually, while also announcing 50% copper tariffs and floating the possibility of 200% duties on pharmaceuticals.
Yet none of the threats have sparked a material market selloff.
“If Trump won’t blink unless forced to by markets, and markets won’t react until he actually implements a major tariff escalation, then it seems totally plausible that some of these tariffs will go into effect on August 1,” Wolfe said.
Wolfe suggested that tariffs on Asian exporters and smaller trade partners, excluding those already in negotiations or under trade deals, may be digestible without disrupting financial markets.
A baseline tariff increase from 10% to 20% on this segment would raise about $60 billion in revenue, said the firm.
Wolfe also interpreted recent Wall Street Journal reporting that Trump needed to be convinced by Bessent to grant a delay as “hawkish,” suggesting Trump is becoming less patient with trading partners and more inclined to act unilaterally.
“If the President’s ‘reserve price’ for trade deals is going up based on market permissiveness and his patience wearing thin, that also reinforces our expectation that sectoral tariffs will be sticky,” Wolfe wrote.