For most people in the financial sector, today has been excellent. A surprising announcement that China and the U.S. are pausing tariffs sent many stocks surging, generating some much-needed momentum.
While many prominent companies reported strong Q1 earnings, entire industries have struggled recently.
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The uncertainty from President Donald Trump’s tariffs has severely compromised financial markets. For some investors, this has been highly concerning, prompting fears of a potential recession.
Today’s tariff news indicates that market conditions may finally be shifting, though, and investors may finally be about to see some relief. However, one financial expert recently chimed in on today’s news, making it clear he doesn’t believe the danger has completely passed.
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Outspoken investor has scathing comments on tariff pause
Anyone who closely follows Tesla stock or often scrolls through social media for financial and investing commentary is probably familiar with Ross Gerber. The president and CEO of Gerber Kawasaki Wealth & Investment Management, Gerber isn’t shy about sharing his take on pressing economic matters.
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Today brought news that the U.S. and China’s governments had released a joint statement announcing a 90-day pause on tariffs. As TheStreet reports, “both nations will significantly lower the tariffs they have imposed on each other, with the U.S. decreasing its tariff against China from 145% to 30% and China lowering its retaliatory tariffs from 125% to 10%.”
Gerber is known for his scathing comments on Tesla, such as calling for Elon Musk to resign as CEO, arguing that it is the only path forward for the company. But today, he shared some harsh words on the tariff pause, laying out his take on where the U.S. economy may be headed.
To illustrate the dynamic of the trade negotiations, Gerber compared Trump and Chinese President Xi Jinping’s negotiation style to a game of chicken, in which both competitors essentially dare the other to make a move. He noted both turned away from the game early, a positive development for consumers.
“It certainly seems like both sides realized the destruction that was being caused,” he posted on X. “Markets are happy, as this might help sidestep a recession.”
Despite this positive sentiment, Gerber added that he doesn’t believe the U.S. economy is by any means “out of the woods yet.” He quickly posted that inflation is still likely to rise and that until the economy shows a “real weakness,” the Federal Reserve should not be expected to lower interest rates.
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This highlights the underlying truth that much remains uncertain for both investors and consumers, even as both the U.S. and China move to pause tariffs. This change is only for 90 days. While markets are rallying today, other factors could compromise economic growth in the near future.
Despite today’s rally, many questions remain unanswered
A key takeaway from today’s events for investors should be that although Trump and Xi have reached a tariff pause agreement, plenty of questions remain unanswered. While most people likely hope that the nations will reach a permanent agreement over the next 90 days, Trump’s nature is unpredictable, making it hard to assess what he may do.
Related: Nvidia stock surges after surprising China trade war news
Mark Williams, chief Asia economist for Capital Economics, recently published a research note, in which he stated:
“The U.S. still has much higher tariffs on China than on other countries and still appears to be trying to rally other countries to introduce restrictions of their own on trade with China. In these circumstances, there is no guarantee that the 90-day truce will give way to a lasting ceasefire.”
Despite these clear risks, Gerber sees the decision to pause tariffs between the U.S. and China for 90 days as much better than letting them continue. Describing them as an “insane experiment,” he noted that “every step back from tariff policies is a positive,” as long as the economy continues to hold up.
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