Last week, the S&P index fell into correction territory as US trade policy remained unpredictable, primarily influenced by President Trump's social media posts. The administration's erratic tariff announcements created a chaotic trading environment, particularly affecting relations with Canada and the EU. A notable drop in consumer sentiment was reported, attributed partly to political perceptions of the economy. The article highlights the challenges for businesses and consumers in adapting to rapidly changing trade policies, leaving markets in a state of uncertainty and hindering risk assessment.
How any consumer, or business, is meant to plan ahead in such an environment is beyond me, with this degree of policy uncertainty also making it impossible for market participants to accurately price risk, or discount the future policy path.
Trump's ire was centred on Canada, again, with the Administration threatening to double steel and aluminium levies imposed on imports from its northern neighbour to 50%, before backing down on such a threat just eight hours later.
The detrimental impact on confidence was on full display in the latest UMich consumer sentiment survey, with the index tumbling to 57.9 per the preliminary March reading, the lowest level since November 2022.
Those hoping for trade uncertainty to begin to dissipate, however, proved to be sorely disappointed, with the volatile, incoherent, inconsistent, and frankly insane way in which tariffs are being thrown around continuing for yet another week.
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