Market Turmoil as Trump’s Tariff Threats Reignite Trade War Fears 

U.S. stocks tumbled sharply after President Trump threatened to impose 50% tariffs on the European Union. This has caught the investors off guard in what had been a relatively quiet trading session. The move, coupled with renewed warnings of tariffs on Apple, has rekindled fears of an escalating trade war. This seems to be the major factor behind last month’s bear market plunge.

Joe Hegger, Chief Investment Officer at Astrozoa Capital, joined CNBC to discuss the market implications. He warns that investors had grown complacent amid a lull in trade negotiations. Hegger noted that markets had been lulled into a false sense of stability following the 90-day tariff pause announced in early April. However, the best-case scenario—a flat 10% tariff rate—depended on all parties negotiating in good faith. This is an outcome he views as unlikely given the administration’s aggressive stance.

There’s been a lot of short-termism embedded in market volatility,” Hegger said, emphasizing that the fundamental trade tensions never truly dissipated.

The president has championed deregulation, tax cuts, and banking sector reforms—policies widely praised by corporate America. Hegger pointed to a growing frustration over policy unpredictability. “If I’m the CFO of a business, I have no idea what my input costs will be six months from now,” he explained. This uncertainty makes it difficult to commit to capital expenditures, R&D, and hiring, potentially leading to an earnings recession.

The Next Catalyst: Tariff Progress or Fiscal Stimulus? 

For bullish investors, Hegger identified two key potential drivers: A negotiated resolution with the EU and China could restore market confidence. If Trump’s tax and spending bills become law, the resulting economic boost could offset trade headwinds. However, Hegger remains cautious, warning that without progress on these fronts, markets could face further declines.

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