--- title: "The market has overfitted the impact of tariffs." type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/28385715.md" description: "The rebound in the U.S. stock market still has momentum, but we need to watch out for the tariff risk on April 2nd. TLT bond funds dropped a full percentage point the other day, clearly showing risk-averse capital starting to pull out. Right now, everyone is so focused on tariffs potentially crippling the economy that they're selectively ignoring stagflation. Trump said tariffs would be dialed back a bit, which could suppress recession expectations—inflation expectations should cool down too. But with commodities surging so aggressively, there's a bit of a contradiction here. Simply put, the market's predictions for inflation and recession are completely misaligned—overfitting the impact of inflation while underfitting the risk of economic downturn..." datetime: "2025-03-26T15:07:17.000Z" locales: - [en](https://longbridge.com/en/topics/28385715.md) - [zh-CN](https://longbridge.com/zh-CN/topics/28385715.md) - [zh-HK](https://longbridge.com/zh-HK/topics/28385715.md) author: "[财界老袍儿](https://longbridge.com/en/profiles/17746390.md)" --- # The market has overfitted the impact of tariffs. The current rebound in the U.S. stock market still has momentum, but be wary of the tariff risks on April 2nd. The TLT bond fund dropped a full percentage point the other day, clearly indicating that safe-haven funds are starting to pull out. Right now, everyone is fixated on tariffs potentially crippling the economy while selectively ignoring stagflation. Trump said tariffs might be dialed back a bit, which could suppress recession expectations and cool inflation expectations. But the sharp rally in commodities creates a contradiction. Simply put, the market’s predictions for inflation and recession are completely misaligned—overfitting the impact of inflation while underfitting the risk of recession. The recent wild swings in the U.S. stock market are largely blamed on the Trump administration’s tariff policies, more like a collective emotional outburst than a reflection of fundamentals. Since Trump took office in January, the S&P 500 has dropped over 10%, and the Nasdaq has plunged nearly 15%. On the surface, trade friction from tariffs directly hits corporate profit expectations, as seen in the pressure on the manufacturing sector. But the market is clearly exaggerating the impact of a single variable—the squeeze on U.S. stock valuation bubbles was inevitable anyway. The deeper contradiction lies in investors treating tariffs as the trigger for a recession while selectively ignoring the inherent weakness of the U.S. economy. The Atlanta Fed’s model suggests Q1 GDP could shrink, Goldman Sachs has already cut growth forecasts, and wage growth exceeding expectations is pushing up inflation, narrowing the Fed’s room for rate cuts. This "tariff panic" masks the market’s real ailment: when rate hike expectations, slowing corporate earnings growth, and policy uncertainty converge, any minor trigger can set off algorithmic trading-driven chain reactions. In fact, some funds are already positioning contrarily—bargain-hunting in quality tech stocks like NVIDIA and unusual moves in the crypto sector hint at growing market divergence. Historical experience shows tariffs’ real economic impact often lags by over six months, yet current U.S. stock pricing is clearly over-discounting short-term sentiment, trapped in a self-reinforcing pessimistic narrative. This overfitting is essentially a stress response from a lack of confidence—when faith in "American exceptionalism" crumbles, any policy fluctuation is interpreted as a sign of systemic risk. As Morgan Stanley put it, the core issue isn’t tariffs but the market finally realizing a decade-long bull run had already exhausted all optimistic assumptions. $Dow Jones Industrial Average(.DJI.US) $SPDR S&P 500(SPY.US) $NASDAQ Composite Index(.IXIC.US) $Tesla(TSLA.US) $TENCENT(00700.HK) $XIAOMI-W(01810.HK) $NVIDIA(NVDA.US) $AMD(AMD.US) $Microsoft(MSFT.US) ### Related Stocks - [.IXIC.US](https://longbridge.com/en/quote/.IXIC.US.md) - [TSLA.US](https://longbridge.com/en/quote/TSLA.US.md) - [00700.HK](https://longbridge.com/en/quote/00700.HK.md) - [80700.HK](https://longbridge.com/en/quote/80700.HK.md) - [HTCD.SG](https://longbridge.com/en/quote/HTCD.SG.md) - [TCEHY.US](https://longbridge.com/en/quote/TCEHY.US.md) - [TCTZF.US](https://longbridge.com/en/quote/TCTZF.US.md) - [01810.HK](https://longbridge.com/en/quote/01810.HK.md) - [81810.HK](https://longbridge.com/en/quote/81810.HK.md) - [HXXD.SG](https://longbridge.com/en/quote/HXXD.SG.md) - [XIACY.US](https://longbridge.com/en/quote/XIACY.US.md) - [MSFT.US](https://longbridge.com/en/quote/MSFT.US.md) - [.DJI.US](https://longbridge.com/en/quote/.DJI.US.md) - [SPY.US](https://longbridge.com/en/quote/SPY.US.md) - [NVDA.US](https://longbridge.com/en/quote/NVDA.US.md) - [AMD.US](https://longbridge.com/en/quote/AMD.US.md) ## Comments (2) - **[已注销] · 2025-03-26T15:36:07.000Z · 👍 2**: The Federal Reserve Bank of Atlanta has traditionally been hawkish, with strong industrial advantages, and dislikes the impact of low-interest environments on industries. - **[已注销] · 2025-03-26T15:21:02.000Z**: Commodities represent tariff-proof warehousing in advance, with inflation rising sharply on the eve of equivalent tariffs. There is a risk of secondary continuation of tariffs, and tariffs are subject to sanction operations.