Trump’s latest trade war turns into another TACO salad for Wall Street

When president Donald Trump gave his speech “Liberation Day” on April 2, and announced a comprehensive tariff across a group of sectors, the market’s reaction was sharply. Investors feared restarting sabotage commercial battles in their first term, and the shares decreased while trying to assess how new fees are crowned through global supply chains.

But after six months, the story looks different. A lot of initial panic has faded, and it was replaced by recognizing that the real economic impact of Trump’s definitions has been diluted through sculpture, negotiating deals, and exemptions. In fact, the stocks were picked up from a multi -day losing chain on Friday, and he responded almost the most recent surprise from the Sanee of Trump’s social media account.

Now, while Trump is trying to move the trade war with an advertisement overnight about a large number of customs tariffs, including a 100 % tariff on drugs with brands, patents and tariffs by 50 % on furniture imports, the markets hardly interact.

Michael Brown, a global investment strategy expert in Franklin Templeton, said the markets are “ended”.

Brown told Brown newspaper to Financial times.

The other reason may be that consumers have proven to be more flexible in the face of higher prices than economists.

Initially, the news shook European and Asian drug makers. Zelanda Pharma has decreased by approximately 3 %, Novo Nordsek lost 1.6 %, and the Sun Laborators in India and more than 3 % decreased in early trading. The Stoxx EUROPE 600 swings for health care between gains and losses before closing it.

However, European stocks as a whole were closed higher, confirming how investors are now deducting Trump’s tariff ads.

Stoxx 600 Pan-European today ended 0.8 %, with CAC 40 in Paris increased by 0.97 %, Dax in Frankfurt by 0.87 %, and IBEX 35 gains in Madrid with a rise of 1.3 %.

Jpmorgan’s strategy quickly told the customers that the Parma tariff “can be largely avoided” for companies that expand American manufacturing.

The note said, according to CNBC: “We still see a controlled effective effect from the customs tariff to our large coverage.”

Flexibility reflects many slopes of drug tariffs. Limestone drugs – which are nine out of 10 American prescriptions – are excluded from new fees. The United States Trade Agreement – the European Union on most European drug exports to 15 %. Companies that invest actively in American manufacturing, such as Eli Lilly, Astrazneca, Roche, GSK and AMGEN, are exempt as it is storming for new facilities.

Analysts were fast to highlight these warnings.

“Many of the large biological pharmaceutical products should not be exposed because they are involved in the activity of building the United States,” said David Resger of Leerink Partners for Biopharma Dive.

The White House pushed the “sculpture”, saying that this is the 232 national security tariff that aims to reformulate cash manufacturing.

Cush Disai spokesman told “Cush Disai” luck. He added that the maximum of 15 % on many European drug exports (and Japanese) reflect broader trade agreements that included “large concessions that prefer the United States”, and not softening the position of customs tariffs.

For investors, the reaction was familiar. The initial volatility has given the way to admit that the customs tariff is rarely widely as announced.

Imports represent only about 10 % of the American economy, giving companies and consumers a field of adaptation. Many companies stored on goods before the final dates, while others turned into two alternative suppliers.

Brown told Financial times.

The silent market response reflects a greater fact: consumers have been more flexible than most economists expected. The data of the Ministry of Commerce issued on Thursday showed that the American economy grew by 3.8 % in the last quarter, which is the strongest extension since 2023, supported by strong home spending and business investment.

Economists note that Americans’ readiness to maintain shopping, even amid high borrowing costs, has been surprised again and repeatedly from the forecasters.

In the words of the wealth director in Boston Jenna Bulfin, the real lesson may be that “do not fight the federal reserve” has become “not fighting the American consumer.”

The calm of the markets also reflects a trading that depends on it – what analysts call the Taco trade (Trump is always preparing). After the shock of “Liberation Day” in April, investors assumed that Trump would follow his fashionable style: the problem of customs tariff threats, and then as soon as the markets began to sway. This confidence has helped stocks to bounce to record the highlands.

The exemptions strengthened this bet. The average actual tariff rate remained much lower than the title numbers, thanks to the slope and exemptions for companies that are separated from American plants.

Economists warn that customs tariffs often take months of ripples through supply chains, so there is still some price pressure later this year. But so far, inflation data has been stable, as it reduces predictions that commercial policy will provide consumer shock.

This story was originally shown on Fortune.com