From Trade Wars To Trade Deals

President Donald Trump will need to declare victories in his trade wars with multiple countries around the world sooner rather than later. He and his fellow Republicans have to avoid a recession caused by his tariff wars. Otherwise, they risk losing their thin majorities in both houses of Congress later in 2026. In addition, court cases are piling up that challenge the President’s legal authority to declare a crisis to justify his tariff hikes. In the event that the courts rule that Trump's tariffs are unconstitutional, he still could declare that he won the trade wars and so doesn't need tariffs anymore.

On April 9, stock investors were overjoyed that Trump postponed his April 2 Liberation Day reciprocal tariffs, which were announced after the market close (chart). The correction in the S&P 500 that started on February 19 ended on April 8. The S&P 500 now has regained almost all its losses since the April 2 close, just before it tanked during the Annihilation Days on April 3 and April 4 (chart).