President Donald Trump has turned his attention back to trade policy in recent days, threatening to resurrect higher reciprocal tariffs on many countries in another few weeks. He has also indicated that product-specific tariffs on copper, pharmaceuticals and even semiconductors are coming soon. In contrast to his “Liberation Day” announcement that trigged a severe reaction in both equity and bond markets back in April, prompting a 90-day pause in the original reciprocal tariffs, the response to these latest threats has been surprisingly muted. Markets appear to believe that Trump will again back down. We are not so sure.
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