{"id":13650,"date":"2025-02-05T15:33:55","date_gmt":"2025-02-05T15:33:55","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=13650"},"modified":"2025-02-05T15:33:56","modified_gmt":"2025-02-05T15:33:56","slug":"tariffs-inflation-and-bond-yields","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/tariffs-inflation-and-bond-yields\/","title":{"rendered":"Tariffs, Inflation And Bond Yields"},"content":{"rendered":"\n

Shawn and Haley B. from Roanoke, VA ask: <\/em>Hi Mitch, with tariffs returning to center stage in terms of economic policy, we\u2019re wondering if inflation will become a concern again. Do you think that could make Treasury bonds more attractive as the year progresses? Thank you.<\/p>\n\n\n\n

Mitch\u2019s Response:<\/strong><\/p>\n\n\n\n

Thanks for writing. Your question offers valuable insight by drawing links between higher tariffs, higher prices, and the bond market\u2019s response to higher prices or the expectation<\/em> of higher prices.<\/p>\n\n\n\n

It\u2019s this last point\u2014regarding inflation expectations\u2014that I think investors should be focused on.<\/p>\n\n\n\n

Looking back on President Trump\u2019s first term, we\u2019re able to make a few assessments about tariffs that can inform how investors position this time around. Some readers may remember the 2018 steel tariffs on Mexico and Canada, which rattled markets and were met with retaliatory tariffs. Within a year, though, the tariffs were dropped, and NAFTA was replaced by the U.S.-Mexico-Canada Agreement\u2014which expanded NAFTA\u2019s scope and opened doors for more trade, not less.<\/p>\n\n\n\n

There was a lot of other trade and tariff posturing, but the duties that ultimately stuck were tariffs on Chinese imports. The market, economic, and inflationary impact of these tariffs has arguably been quite muted, in my view, as measured by total trade and equity market performance over that period. A lot of trade was ultimately rerouted through countries like Vietnam and Mexico.<\/p>\n\n\n\n

How Tariffs and Inflation Shape Market Volatility<\/a><\/u><\/strong><\/p>\n\n\n\n

Market fluctuations often raise tough questions for investors, especially when policy changes\u2014like tariffs\u2014impact expectations. Understanding these dynamics can help you make informed decisions during uncertain times.<\/p>\n\n\n\n

In our complimentary guide, \u201cNavigating Market Volatility1<\/sup><\/a><\/u><\/strong>,\u201d<\/em> you\u2019ll find answers to key questions, including:<\/p>\n\n\n\n