Managing Editor’s Note: President Trump’s tariff announcements have officially struck the markets.
So today, we’re turning to Near Future Report senior analyst Nick Rokke for an update on the situation.
You’ve heard from him about the topic a couple of times leading up to President Trump’s announcement… on the uncertainty flooding the markets and the truth about tariffs.
Today, he’s cutting through the noise to show us what we should be paying attention to as tariff negotiations play out… who the key players are and their impact… and what to expect in a market where traditional investing rules no longer apply.
President Trump made his long-anticipated tariff announcement from the Rose Garden last Wednesday evening. And the market’s response was immediate and unforgiving.
Since that moment, both the S&P 500 and Nasdaq have dropped by 12%.
Today, we’re going to focus on what is, without question, the single most important variable driving the markets right now: tariff negotiations.
Everything else from earnings to growth to valuations has taken a backseat. Because until we know how this trade policy evolves, fundamentals won’t matter because investors will have less certainty about future earnings.
It all comes down to this…
If these tariffs remain in place and no new trade deals materialize, the market will likely head lower. And I’ll show you how far it could fall in just a moment.
If the Trump administration’s negotiations soon result in meaningful trade deals and tariff rollbacks, I’d expect a sharp market recovery. In that scenario, we could see a 10% rally within days. And that could mark the beginning of the next bull market.
We are still optimistic about our original thesis that the latter will play out in the days and weeks ahead and that the current response is a temporary market hiccup, not the beginnings of a long-term downturn.
But it all hinges on how the tariff negotiations shake out.
Regardless of which way you think the situation will unfold, my main goal today is to walk through the key factors investors need to watch so you can be prepared either way.
And as always – especially in moments of heightened volatility and emotions are high – we encourage everyone to consult with their financial advisor before making any major allocation decisions.
As long as tariff uncertainty dominates the headlines, fundamentals won’t matter in the short term.
And that’s perfectly fine with us. These temporary disconnects between price and value are exactly what create outsized investment opportunities for those with the patience and discipline to act.
Last week, in The Bleeding Edge – Time to Go Bargain Shopping, we highlighted a few such dislocations in the market. Those names are even cheaper today – and the long-term upside has only improved.
The most widely watched valuation metric is the price-to-earnings (P/E) ratio on the S&P 500. This tells us how much investors are willing to pay for one dollar of earnings.
Even after the recent pullback, the S&P 500 is still trading at 21.7x forward earnings.
Let’s put that in perspective…
At the pandemic bottom, the PE ratio dropped to 15 – that’s 31% lower. And if these tariffs stay in effect and impact supply chains, we could go to broad market valuations seen during the Great Recession in 2008–2009. Those bottomed at 10, which is 54% lower than right now.
If tariffs persist and disrupt supply chains, there’s a chance we revisit those levels.
I’m not saying we will go that far. But it’s a possibility that all investors need to be aware of. History matters… And the market as a whole is still not what I would consider cheap.
In this kind of environment, traditional investing rules don’t apply.
Forget about growth-at-a-reasonable-price (GARP), strong margins, or revenue acceleration. Wall Street simply isn’t paying attention to those metrics right now.
And for readers who rely on technical analysis, I’ll offer the same caution.
When a macro force like tariffs takes over, charts can break down quickly. Support levels that once looked solid get sliced through like a hot knife through butter.
Take a look at this chart below. It shows key support levels that technicians were watching closely this month (in red). Every one of them failed.
The blue trendline marks the next major support. If that breaks, most chart watchers agree the next stop is the July 2023 high of around $460 on the SPY ETF. That implies another 10% downside from here.
So let’s talk about how these trade negotiations are likely to play out.
First, let’s talk about China.
China is the world’s largest trading nation with $7 trillion in total trade volume (exports plus imports). The U.S., by comparison, has $5.4 trillion.
And so far, China is the only country that’s openly retaliated against President Trump’s new tariffs – by raising tariffs of their own.
Now, it’s critical to understand how the Chinese government is thinking here.
Yesterday, I was golfing with a close friend who speaks fluent Mandarin. And he was listening to Chinese-language news in his cart. So naturally, as we waited on every tee box, I’m asking questions.
Here’s the takeaway…
China believes it has leverage.
They see themselves as the bigger trade player. And technically, they’re right. And they see themselves as a huge exporter nation.
But here’s the key detail: They only import about $150 billion from the U.S.
Comparatively, the U.S. imports over $528 billion in Chinese goods annually. That trade imbalance is precisely what President Trump is targeting. And from the U.S. perspective, that imbalance gives the U.S. the upper hand.
China’s leadership, including President Xi Jinping, believes they can absorb the blow. On key commodities like soybeans – the largest U.S. export to China at $15.2 billion annually – they believe they can simply increase imports from Brazil or other markets.
In other words, they don’t think prices will rise much inside their borders. They believe they can wait it out… and even use the disruption as a way to expand their influence globally, portraying themselves as a more stable and dependable trading partner than the U.S.
That’s China’s game.
Now how do we think Trump will respond to this? Does he seem like he’s the type of leader who will back off and say, “Oops, I made a mistake and overplayed my hand here”?
Of course not. Here’s what he posted to Truth Social after China’s response.
This tells us everything we need to know.
Trump has no intention of backing down. If anything, he views this as an opportunity to make an example out of China and send a message to every other country…
The United States is done playing by one-sided trade rules.
On that note, just today, Trump announced that unless China rolls back its retaliatory 34% tariff hike, the U.S. will respond with an additional 50% tariff on Chinese goods starting April 9.
And more notably, all trade negotiations with China have been suspended.
So the question becomes: Who blinks first?
So far, no other country has retaliated with new tariffs.
In fact, more than 50 nations have reached out to the Trump administration to begin talks and avoid being swept up in these new measures. That’s a very positive sign.
We’ve already heard about high-level negotiations with both Vietnam and Japan. While nothing’s been signed yet, the conversations are well underway. And European Commission president Ursula von der Leyen said the EU “offered zero-for-zero tariffs on industrial goods.”
However, they are rumored to approve an initial set of countermeasures on up to $28 billion of imports from the U.S. if deals go nowhere.
Most countries will take the path of least resistance. And that means cutting deals with the U.S. and not escalating trade wars. After all, America remains the largest consumer market in the world. It’s simply too important to ignore.
And as these trade deals begin to roll in, the market will notice.
Every new agreement – especially with key trading partners like Vietnam, Japan, or the EU – will catalyze a market rebound.
We could go from fear to euphoria almost overnight.
That’s why we need to watch the negotiations closely over the coming weeks. The market’s direction will be dictated by diplomacy, not data.
Many people I talk to and follow their research were initially excited about a second Trump term. Some are now questioning whether this new tariff regime is too aggressive, too chaotic.
Take the Rose Garden press conference. The blanket 10% tariff was expected. But what surprised Wall Street was the layered, country-specific add-ons, many of which looked hastily calculated. The result? A broad-based market selloff.
But here’s what most investors are missing…
There is a plan.
While President Trump may play the “wild man” card to gain negotiating leverage, his economic team is much more methodical behind the scenes. And they’ve been remarkably clear about what they’re trying to accomplish.
One of the most insightful interviews I’ve seen on this topic came from Treasury Secretary Scott Bessent on Tucker Carlson’s show. If you haven’t watched it yet, I highly recommend it. It’s an hour long, but it lays out the full picture of how the Trump team is thinking about global trade. You can go here to watch it on YouTube if you’re interested.
Bessent put the entire strategy in context.
He said Alexander Hamilton was the original “tariff man.” In the early days of the Republic, tariffs were used to fund the government and protect young industries. Trump has added a third purpose: negotiation.
Tariffs are no longer just about protection or revenue. They’re leverage.
Bessent said that Trump’s tariff plan is “transformational” for the American economy and workers. The aim is to reverse the decline in the middle class by shifting from a “highly financialized economy” to one that prioritizes manufacturing, especially that of national security-relevant goods.
And Bessent made it clear: The best way for a company to avoid tariffs?
“Build your factory here.”
Bessent also challenged the common talking point that tariffs always lead to higher prices for U.S. consumers. His reply?
If tariffs are so bad, why do [other countries] have them? If the consumer pays, why do they care?
His point is clear: Many foreign exporters absorb the cost of tariffs to remain competitive in the U.S. market.
That doesn’t sound like an administration in a rush to make concessions. If anything, it signals that the U.S. is willing to hold firm until it gets trade deals on its terms.
This morning, White House trade advisor Peter Navarro doubled down, saying:
Let’s take Vietnam. When they come to us and say, “We’ll go to zero tariffs,” that means nothing to us because it’s the nontariff cheating that matters.
He’s talking about issues like:
These are real concerns. And for the Trump team, fixing them is the goal. Not just striking a deal to strike a deal. That means some countries may have to feel economic pain before coming back to the table.
Until progress is made on trade negotiations, the market isn’t likely to rally.
In fact, the longer this drags out, the more volatility we’ll experience.
We’re already seeing the pressure. Forced margin calls spiked to pandemic-era levels last week. Hedge funds had to post more collateral for their margin loans, leading to widespread forced selling on Friday.
This selling spares no stocks – even in traditionally safe dividend-paying stocks like AT&T (T), Verizon (VZ), and major insurers.
If we break more technical levels, this could escalate.
But once deals start getting announced, the market will rip higher.
We got a preview of that just this morning. An unconfirmed rumor that the White House was considering a 90-day pause on tariffs sent the S&P 500 up nearly 6% in eight minutes.
That’s how quickly sentiment can shift.
And if we start seeing broad-based fair trade deals roll in from countries like Vietnam, Japan, or members of the EU, that will mark the beginning of the next bull market.
We intend to be positioned for it. And we hope our readers will be too.
One sector we’re watching closely right now is semiconductors.
Since February 20, the iShares Semiconductor ETF (SOXX) has dropped 33% – despite the fact that semiconductors were specifically excluded from the tariff list.
Why?
Because the Trump administration knows that semiconductors are the foundation of the AI arms race.
As Jeff has predicted, Elon Musk’s xAI will reach artificial general intelligence (AGI) within twelve months, and very possibly by the end of this year. That’s when they plan to have successfully linked together one million NVIDIA GPUs.
That’s the path to artificial superintelligence (ASI)—and it will represent a technological and economic edge that will shape the future for decades.
So the U.S. simply can’t afford to disrupt semiconductor supply chains.
And as long as Taiwan Semiconductor (TSMC) is expanding its U.S. footprint with $150 billion in planned fabrication facilities, semiconductors specifically from Taiwan, won’t see any new tariffs.
And that’s why this beaten-down sector – trading at deeply discounted valuations – is where smart capital is quietly returning…
We saw that today with major semiconductor companies like NVIDIA (NVDA), Micron (MU), and Broadcom (AVGO) all gaining on the day.
Things are a bit hectic right now. Emotions are running high and it’s triggering a lot of volatility. But we firmly believe the turnaround is coming.
So, in the meantime, keep calm. Consider snapping up some high-quality stocks at a bargain while valuations are low. And don’t worry, we’ll keep you informed as the situation continues to play out.
Regards,
Nick Rokke
Senior Analyst, The Bleeding Edge
P.S. Don’t forget to sign up with one click for Jeff’s Robotaxi Emergency Briefing this Thursday at 1 p.m. ET.
Tesla’s robotaxi rollout is coming up quickly. Come June, his fleet of Cybercabs will hit the roads of Austin, Texas. It won’t be long after that we’ll see the technology hit cities across the U.S. and then the world.
Jeff’s got his eye on a handful of small companies set to benefit most from this rollout, no matter what’s going on with tariffs or market volatility.
Go here to automatically add your name to the attendees’ list.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
