Economist Jeremy Siegel expressed his views on the recent developments surrounding President Donald Trump’s tariffs on China, suggesting they are likely a temporary measure. Following Trump’s alarming post on Truth Social, where he described China as “becoming very hostile” in ongoing trade negotiations and announced the potential imposition of a 100% levy in addition to existing tariffs, the stock market experienced a significant sell-off. The S&P 500 index fell 2.7%, marking its largest decline since the initial downturn triggered by the “Liberation Day” tariffs in April.
In an interview with CNBC on Monday morning, Siegel maintained that he does not foresee the current tariff situation being permanent. He suggested that once the matter is resolved, combined with other positive economic indicators, the market could reach new heights. He projected that China would likely pursue discussions aimed at lowering its existing tariff rates, which currently average around 55% on exports to the U.S.
Historically, the stock market demonstrated resilience following initial tariff announcements, as it entered a bull market fueled by excitement around artificial intelligence, anticipated interest rate reductions by the Federal Reserve, and optimism surrounding trade negotiations. Year-to-date, U.S. stock indexes have consistently set new records, with the S&P 500 peaking at 6,754.49 and the Nasdaq Composite reaching 23,119.907 last week.
In an update on Monday, the stock market showed signs of recovery, with the S&P 500 rising by 1.5% to 6,652.14 points by midday, while the Nasdaq Composite increased by 2% to 22,662.84. The Dow Jones Industrial Average also gained approximately 1.3%, reaching 46,052.44 points.
Alongside his commentary on tariffs, Siegel shared his insights regarding Bitcoin as a potential investment for those seeking to hedge against market volatility. He expressed skepticism about Bitcoin’s utility as a diversifier for short-term risks, noting that it dropped significantly during the market turmoil. On Friday, the cryptocurrency fell from over $120,000 to below $110,000. In contrast, Siegel pointed out that gold regained its status as a safe-haven asset, having surpassed $4,000 per ounce recently, while Treasury yields rose as well. Gold has become increasingly popular among investors seeking protection against inflation and uncertainty, particularly leading up to Trump’s inauguration.
