Reciprocal tariffs imposed by US President Donald Trump may not cause an immediate market crash, but they are acting as a “slow burn” for Wall Street, gradually distorting markets, pressuring consumers, and provoking potential retaliation, according to a new One World Outlook report by Zoya Najeeb.
While stock indexes hit record highs, the article warns that the US economy is quietly absorbing the negative effects of tariffs. “Tariffs are essentially taxes, and this is a tax hike on Americans — especially the lower half of the income ladder — at a time when they are already struggling,” the report notes.
In July alone, the White House celebrated $29 billion in tariff revenue, with expectations of $50 billion a month soon. Yet companies are feeling the pinch: Caterpillar Inc. projects the new tariffs will cost up to $1.5 billion this year, including $500 million in the current quarter.
Despite this, its stock remains steady, buoyed by investor optimism over unrelated booms in AI data centres and infrastructure spending. This disconnect reflects what analysts describe as a K-shaped economy — where tech-driven growth props up indexes, but broader market performance remains flat.
Even Warren Buffett has been selling stocks for 11 consecutive quarters, amassing a $344 billion cash reserve — a sign he’s anticipating a downturn. Meanwhile, former US House Speaker Paul Ryan has cautioned that tariffs could face legal challenges, warning of “choppy waters ahead.”
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