When President Donald Trump was asked on Friday about his tariff policies, he said: "I didn’t change my mind. I don’t change. But the word ‘flexibility’ is an important word. Sometimes there's flexibility. So there will be flexibility, but basically it's reciprocal." A WSJ article posted at 5:26 pm today is titled "White House Narrows April 2 Tariffs." It reports: "The administration is now focusing on applying tariffs to about 15% of nations with persistent trade imbalances with the U.S.—a so-called “dirty 15,” as Treasury Secretary Scott Bessent put it last week." The tariffs might be effective immediately on April 2. Furthermore: "The administration’s shift comes after weeks of tough talk with trading partners and U.S. industries alike. Officials from Canada and Mexico said they were told there was no way to avoid reciprocal tariffs ahead of April 2, though they hoped Trump would be open to reducing tariffs through negotiations after that date."
The stock market may be bottoming on the prospects that the tariffs might be more targeted and negotiable. Trump certainly provided a one-day Trump Put on Friday, when the S&P 500 dropped sharply on the open but rallied to close slightly above Thursday's close.
We still expect the stock market to be choppy through mid-year, but it could be choppier to the upside now that it has been choppy to the downside since mid-February. Over the past 10 years, March has been a weak month for the S&P 500, with a zero return on a year-to-date basis on average (chart). Then the index rallied by six percentage points on average through late July.
