Tariff reversal sends stocks higher

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Investors were once again reminded over the weekend that when it comes to the trade war, threats often do not become reality.

US stocks were on the rise Tuesday, thanks to signs the US could be approaching a deal with the EU, as well as May’s better-than-expected consumer confidence survey.

Let’s start with a trade war update. Today’s rally follows a long weekend of heightened tensions, after President Trump on Friday said he would impose a 50% tariff on the EU, sparking a selloff late in the session. By Sunday, though, he had announced a pause on the levies until July 9.

“Talks will begin rapidly,” Trump wrote in a Truth Social post Sunday night.

The S&P 500 and Nasdaq Composite indexes had erased Friday’s losses — trading 2% and 2.5% higher on the day, respectively, as of 2 p.m. ET.

Apple shares were also on the rise after facing headwinds on Friday following Trump’s threat to impose a 25% on iPhones made outside the US. I’ve written before about why I think Trump will be forced to spare Apple when it comes to his trade policy agenda, and we saw a hint of that over the weekend.

Trump’s Friday morning Truth Social post triggered a selloff in APPL futures; the stock opened 3.5% lower that day. By Tuesday, the administration was doing damage control. National Economic Council Director Kevin Hassett said this morning on CNBC that they “don’t want to harm Apple.”

By 2 p.m. ET, Apple shares were back in the green, trading 2.7% higher on the day and just below last Thursday’s close.

Trump’s threat and Hassett’s comments come about six weeks after the administration issued a tariff “exemption” on certain consumer electronics, including iPhones. We’re getting whiplash.

It’s true that Trump has said he’s willing to tolerate a level of pain in markets (remember, don’t be a “panican”), but we’ve seen time and time again that there’s a threshold. That’s one explanation for these back-and-forth policies that change on a sometimes hourly basis. If you ask Karoline Leavitt, though, the president is practicing the “Art of the Deal.”

Either way, stocks are trading on Truth Social posts. If anyone tells you they know where these tariff policies will land, take whatever they say with a grain of salt.

The other thing moving markets today was May’s consumer confidence survey.

The report came in much higher than expected, gaining 12.3 points on the month to hit 98. Analysts had projected a reading of 87. The numbers suggest that households may be feeling more positive about where tariffs will end up.