Photo: Reuters/Brendan McDermid

After a tumultuous start to the week, which saw equity markets tumble on Monday amid tariff fears and a flurry of Trump tweets attacking Amazon, stocks recovered to close in the green each of the next three days.

The S&P 500 (+0.69%), Dow Jones Industrial Average (+0.99%) and Nasdaq (+0.49%) all rose on Thursday, while the dollar gained and Treasuries fell.

After digesting the news of proposed tariffs, investors are evidently reverting to the position they have held consistently since Trump took office: the president is more bark than bite.

Reports over the past several months have suggested that the president has become emboldened to trust his instincts over the protestations of advisors, which may have contributed to the market jitters. But on tariffs, White House officials, including Commerce Secretary Wilbur Ross and economic advisor Larry Kudlow, have signaled that they are merely a bargaining tactic.

“You know, there are carrots and sticks in life, but he is ultimately a free trader,” Kudlow said of Trump on Wednesday, after acknowledging the possibility that tariffs may not be implemented in the end. “he wants to solve this with the least amount of pain,” he added.

There is also question regarding just how disruptive the proposed tariffs would be. Analysis from Goldman Sachs published on Thursday found that the impact from both the US and Chinese tariff proposals would be limited. The US list, for instance, is heavily weighted toward component products that are not used in assembly in the US. High-volume end-use technology exports were largely spared in order to limit the pain felt by the US consumer.

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