Markets are shrugging off Trump's tariffs. Experts explain why.

Date: July 16, 2025 – ABC News
Author: Max Zahn
Overall Verdict: 🟡 Moderate Integrity
The article presents coherent macro-financial insight but suffers from selective source referencing and lacks formal economic modeling or documentation of expert claims.

🧾 Summary

Main Point:
Despite a new wave of aggressive tariffs imposed by President Trump—some reaching 50%—U.S. stock markets have largely ignored the news, continuing to reach record highs.

Key Highlights:

• Tariff Actions: Trump recently reinstated and expanded tariffs on key trade partners like the EU and Mexico. More are set to take effect on August 1.

• Market Reaction: Markets no longer respond with sharp declines as they did in early April, when the “Liberation Day” tariffs caused a $3.1 trillion loss in value. Now, investors view tariffs as temporary negotiating tactics, not fixed policy.

• The “TACO” Effect: Investors have coined the acronym TACO – Trump Always Chickens Out – reflecting a belief that Trump uses tariffs as leverage, but usually pulls back before enforcing them fully.

• Inflation Impact: Inflation rose 2.7% YoY in June. Some experts attribute this partly to tariffs, suggesting the impact is showing up in higher prices and reduced corporate margins.

• Economic Resilience: Despite inflation and tariff noise, economic indicators remain stable. Markets appear to be pricing in Trump's pattern of tariff threats followed by negotiation.

• Analyst Commentary:

  • Bret Kenwell (eToro): Describes investor “headline fatigue” and declining sensitivity to trade policy headlines.

  • Callie Cox (Ritholtz): Warns that while markets seem strong, the real cost of tariffs will appear in inflation and profits.

  • BNP Paribas: Flags a rising risk of “tit-for-tat” escalation but expects trade deals to avoid worst-case outcomes.

✅ 1. Truthfulness of Information

Verdict: 🟢 Fully Compliant

• Describes verifiable events: Trump's imposition and partial rollback of tariffs.

• Reports factual market responses (e.g., April 2 selloff, April 9 rebound).

• References accurate inflation data (2.7% YoY in June) consistent with typical CPI trends.

• Includes precise quotes and correct contextual attribution (e.g., the "TACO" acronym).

• Effective tariff rate (20.6%) aligned with independent academic source (Yale Budget Lab).

🧾 No factual errors detected in numeric or event-based reporting.

⚠️ 2. Source Referencing

Verdict: ⚠️ Partial Compliance

• Expert commentary attributed (Bret Kenwell, eToro; Callie Cox, Ritholtz; BNP Paribas), but:

  • No links or formal citations to memos or data sources (e.g., Yale Budget Lab study not hyperlinked).

  • Absence of government data sources for CPI/inflation claims (e.g., BLS or BEA not mentioned).

  • BNP Paribas and Ritholtz memos are described but not excerpted or publicly verifiable.

📌 Improvement needed in external traceability and verification of claims presented as analysis.

⚠️ 3. Reliability & Accuracy

Verdict: ⚠️ Moderate

• Relies heavily on anecdotal investor sentiment ("headline fatigue", "markets shrugged") without contrasting views (e.g., bond market reaction, Fed interpretation).

• Lacks breakdown of inflation contributors — no detail whether CPI spike is tariff-related vs. energy, food, services, etc.

• The “TACO” framing is presented as consensus when it may represent only one segment of institutional investors.

📌 Accuracy is maintained in event reporting, but analytical framing leans on soft heuristics.

⚠️ 4. Contextual Judgment

Verdict: ⚠️ Moderate

• Article does not explore broader macroeconomic implications:

  • No reference to monetary policy response (e.g., Fed rate expectations).

  • Lacks international context—how Europe/Mexico/China are responding to tariffs.

• Omits impact on specific sectors (e.g., manufacturing, agriculture) or consumer groups.

📌 Narrative is narrowly scoped on equity market reaction, omitting plural context layers.

🟢 5. Inference Traceability

Verdict: 🟢 Compliant

• Cause-effect chains are explicit:

  • Trump imposes tariffs → initial market drop → negotiation signals → market rebound.

  • Tariffs imposed again → muted market response explained via “negotiation signaling fatigue.”

• No hidden logic jumps. The reader can trace reasoning, even if speculative framing is present.

📌 Interpretative, but logically structured.

🔎 Structured Commentary

This article functions as a digestible synthesis of market psychology in the face of erratic trade policy. It succeeds in conveying how investors have adapted to repeated tariff shocks through a lens of desensitization or “TACO” skepticism. However:

• The inflation commentary is underdeveloped; no evidence that tariffs directly caused the June CPI rise.

• The absence of opposing expert views or economic modeling weakens the robustness.

• While effective as media narrative, the piece should not be used as a basis for policy or investment decisions without supplemental primary data.