All Bark, no edge: Trump’s last trade war turns into another tacos salad for Wall Street

But six months later, the story seems different. A large part of the initial panic has faded, replaced by the recognition that the real economic impact of Trump’s prices was softened by the cuts, negotiated transactions and exemptions. In fact, the actions released a sequence of people of several days on Friday, almost reacting with contempt for the last surprise of Trump’s social media account.

Now, while Trump tries to rekindle the trade war with a night announcement of a multitude of prices, including a 100% price on brand and patented pharmaceuticals and 50% prices on furniture imports, the markets are barely reacting.

Michael Browne, world investment strategist at Franklin Templeton, said the markets considered prices as “finished”.

“The real level of prices is much lower, which is one of the reasons why the impact has been attenuated,” said Browne Financial time.

The other reason might be that consumers have proved to be much more resilient at higher prices than formerly expected economists.

Pharmaceutical fear quickly softens

At first, the news shook manufacturers of European and Asian drugs. Zealand Pharma dropped by almost 3%, Novo Nordisk lost 1.6% and India Sun Pharmaceutical and Divi’s laboratories fell by more than 3% at the start of negotiations. The STOXX 600 health index has changed between gains and losses before closing flat.

However, European actions as a whole have closed above, highlighting the way investors now reduce Trump’s pricing announcements.

The pan -European STOXX 600 ended the day by 0.8%, the CAC 40 in Paris up 0.97%, the Dax in Frankfurt up 0.87%and the head gains from Madrid IBEX 35 with an increase of 1.3%.

JPMorgan’s strategists quickly told customers that the pharmaceutical rate was “largely avoidable” for companies that widen American manufacturing.

“We continue to see a very manageable overall impact of prices to our large capitalization coverage,” said the note, according to CNBC.

Resilience reflects the many sculptures of pharmaceutical prices. Generics – which represent nine out of ten American prescriptions – are excluded from new samples. An American and American trade agreement limits tasks on most European exports of drugs to 15%. And companies actively invest in American manufacturing, such as Eli Lilly, Astrazeneca, Roche, GSK and AMGEN, are exempt as soon as they innovate new facilities.

Analysts quickly highlighted these warnings.

“Many biopharmaceutical companies with large capitalization should not be exposed because they are engaged in a sort of American construction activity,” said David Risinger de Leerink Partners Biopharmatic diving.

The White House rejected the framing of the “sculpture”, saying that these are the national security prices of section 232 aimed at reshaping critical manufacturing.

Exemptions for companies “build” American factories are temporary, intended to give companies the track to move production without the prices immediately of hiking, said spokesperson Kush Desai Fortune. He added that the 15% of ceilings on many European (and Japanese) pharmaceutical exports reflect wider trade agreements which included “significant concessions that promote the United States”, not the softening of the tariff position.

Resilient consumers

For investors, the reaction was familiar. The initial volatility has given way to recognition that prices rarely land as largely as announced.

Imports represent only around 10% of the American economy, which gives companies and consumers in the place to adapt. Many companies are full of goods before deadlines, while others have moved to other suppliers.

“Inflation may pass, but there is no sign yet,” said Browne Financial time.

The response of the dull market also reflects a more important truth: consumers have been much more resilient than most economists expected. The data from the Commerce Department published Thursday have shown that the US economy increased at an annual rate of 3.8% in the last quarter, its strongest section since 2023, powered by robust household expenses and commercial investments.

Economists note that the will of the Americans to continue to shop, even in the midst of high borrowing costs, has repeatedly surprised the forecasters.

As Gina Bolvin, the director of wealth of Boston said, the real lesson may be that “do not fight the Fed” has become “do not fight the American consumer”.

Taco

The calm of the markets also reflects a profession on which they came to count – what analysts call the profession of tacos (Trump always chickens). After the shock of April’s “Liberation Day”, investors assumed that Trump was following his familiar model: scanning pricing threats, then retreating once the markets started to vacillate. This confidence helped the actions to bounce to record heights.

The exemptions have strengthened this bet. The average effective rate rate has remained well below the titles figures, thanks to the exemptions from sculpture fand for innocent companies on American factories.

Economists warn that prices often take months to wave thanks to supply chains, so that certain price pressure could still emerge later this year. But so far, inflation data have remained stable and undercoat the predictions according to which the commercial policy would provide a shock from consumers.

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