Ah, the stock market. A bastion of logic, predictability, and calm, right? Not when Donald J. Trump is in the vicinity. As of Friday, July 26, 2025, the financial world finds itself in a peculiar state of affairs: major indices are hitting all-time highs, while simultaneously navigating a minefield of tariff threats and “deals” that seem to shift faster than a New York minute. It’s a masterclass in market cognitive dissonance, where the only consistent policy appears to be perpetual motion, and Wall Street, ever the adaptable beast, has learned to dance to this erratic, yet oddly profitable, tune.
The Tariff Tango: A Dance of Threats and Relief Rallies
Just this past week, the S&P 500 and Nasdaq notched record high closes, with the S&P 500 climbing +0.40% to 6,388.64 points and the Nasdaq gaining +0.24% to 21,108.32 points on Friday alone. The Dow Jones Industrial Average also joined the party, rising +0.47% to 44,901.92 points. For the week, the S&P 500 was up 1.5%, the Nasdaq added 1%, and the Dow rose 1.3%. This surge, we are told, was largely “lifted by optimism” that the U.S. could soon reach a trade deal with the European Union. European Commission President Ursula von der Leyen is even scheduled to meet President Trump in Scotland on Sunday, with officials “expecting to reach a framework trade deal this weekend.” Trump himself, ever the precise negotiator, put the odds of a U.S.-EU trade deal at a confident “50-50.”
This newfound optimism stands in stark contrast to the earlier pronouncements. Only recently, Trump announced a “tariff blitz” on 200 countries, with planned tariffs of 15-50% aimed at the EU and Mexico to begin August 1. Indeed, Mexico faces a 30% tariff rate if a deal isn’t struck by Friday. The EU, for its part, has already “approved countermeasures” in case talks collapse, threatening to hit American exports with up to 30% tariffs on €100 billion worth of goods, including Boeing aircraft, U.S.-made cars, and bourbon whiskey. It’s almost as if the market has developed a peculiar coping mechanism, rallying on the mere *hope* that a threatened economic catastrophe might be slightly less catastrophic than initially advertised.
Consider the recent U.S.-Japan trade deal, announced on Tuesday, July 23, 2025. This “massive” deal, as Trump dubbed it, saw the U.S. reduce its proposed tariffs on Japanese auto imports from 25% to 15%. Markets, ever grateful for a smaller stick, cheered. The Nikkei 225 in Tokyo rallied a remarkable 3.5% on the news. Japanese automakers like Toyota Motor Corp. (TM), which surged as much as 16% (its most since 1987), and Honda Motor Co. (HMC), which closed up 11%, saw significant gains. Brian Jacobsen, chief economist at Annex Wealth Management, perfectly encapsulated the absurdity: “It’s a sign of the times that markets would cheer 15% tariffs… A year ago, that level of tariffs would be shocking. Today, we breathe a sigh of relief.” Wall Street has truly become accustomed to low expectations, finding joy in merely avoiding the worst-case scenario.
The China Conundrum: A Persistent Headache
While Japan got a “deal,” the trade war with China remains a persistent, throbbing headache. Trump “dramatically escalated” the trade war with China in April, rolling out sweeping new tariffs. The effective tariff rate on Chinese goods briefly hit an eye-watering 145% at one point, currently sitting at 30%. This has left major American companies, particularly those with significant manufacturing ties to China, in a rather uncomfortable position.
Apple (AAPL) is a prime example. The tech giant’s stock has been under considerable pressure this year, declining 14% year-to-date compared to the S&P 500‘s 8% gain. This is attributed not only to a perceived lag in the AI market but also directly to President Trump’s trade policies. Starting August 1, tariffs will apply to Apple products manufactured in Thailand, including the Mac and Apple Watch. While Apple is reportedly exploring alternative production hubs in countries like India and Vietnam to mitigate the impact, it’s a costly and complex endeavor. Laura Martin, an analyst at Needham, has even urged caution on Apple stock, citing the company’s lack of a clear AI strategy and the significant investments required to catch up with rivals. It seems even the most valuable company in the world isn’t immune to the whims of trade policy.
Then there’s Boeing (BA). In April, China, in a rather pointed response to U.S. tariffs, ordered its airlines to halt new Boeing jet deliveries and seek government approval for existing orders. This hit Boeing shares, which fell nearly 2.4% on April 16, 2025, though they recovered modestly the next day. Economist Justin Wolfers, with a hint of exasperation, noted that this tariff policy was supposedly going to “solve the fentanyl crisis, get rid of illegal immigration, rescue the budget deficit, solve bilateral trade deficits and cure toe fungus….Actually we’re serving none of those goals.” A truly comprehensive policy, indeed.
The Auto Industry’s Bumpy Ride
The automotive sector has been particularly susceptible to the tariff turbulence. German automaker Volkswagen (VOWG_p) reported a staggering 1.3-billion-euro ($1.5-billion) hit from tariffs in the first half of 2025. The company was forced to cut its full-year operating profit margin forecast to between 4% and 5%, down from a previous 5.5% to 6.5%, and expects full-year sales to be flat instead of 5% higher. Volkswagen shares initially dropped as much as 4.6% in early Friday trading (July 25, 2025), though they managed to recover to be up 1% by 1305 GMT. CEO Oliver Blume stated the company “cannot assume that the tariff situation is only temporary” and must accelerate cost-cutting efforts.
They’re not alone. Michigan-based General Motors (GM) reported that tariffs cost it a cool $1.1 billion in the second quarter. GM also forecasted its second-half EBIT to be around $1.75 billion lower due to the “net tariffs.” Stellantis (STLA), the maker of Jeep and Fiat, reported a $2.7 billion loss for the first six months of 2025 and saw its stock lose 20.57% this year. It seems the auto industry is learning that “America First” can sometimes mean “profits last” when supply chains are global.
Analysts: Betting on the “TACO” Trade
Despite these very real hits to corporate bottom lines, the broader market has displayed a remarkable, almost defiant, resilience. In April 2025, when Trump’s tariff policy was first unveiled, both the Nasdaq and S&P 500 “cratered,” falling roughly 20% from their February market highs. However, markets “sharply rebounded in the ensuing months” due to what analysts have affectionately, or perhaps resignedly, dubbed the “TACO” trade – a tongue-in-cheek acronym for “Trump always chickens out.” The prevailing sentiment among some analysts, according to Truthout, is that markets are “pretty sure that Trump is bluffing and that, if his bluff is
DISCLAIMER: We read Trump’s posts so you don’t have to. This is comedy meets market data, not financial advice. Not political advice either – we just like charts and chaos.
Elana Harper is a seasoned financial editor and market analyst with over a decade of experience covering global equities, economic trends, and corporate earnings. Known for her sharp insights, Elana specializes in making complex financial topics accessible to a broad audience. She now serves as the Senior Financial Editor at Stock Market Watch, where she oversees daily market coverage and political commentary.