Torsten Sløk: Trump’s Tariffs Could Be Genius—or a Disaster as Markets Soar

U.S. stocks climbed in midday trading Friday, as investors looked past trade uncertainties and legal headlines, favoring signs of resilience in the economy and select corporate sectors. The Dow Jones Industrial Average surged 554.13 points, or 1.28%, to 43,941.10. The Nasdaq Composite rose 104.86 points, or 0.52%, to 20,272.80, while the S&P 500 added 42.73 points, or 0.70%, reaching 6,183.75.

The rally follows a week of choppy trading, driven by escalating tariff pressures and mounting geopolitical concerns.

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Tariff Regime Spurs Volatility—and Maybe a Masterstroke

Financial markets remain on edge as President Donald Trump's April 2 tariff regime—dubbed “Liberation Day”—continues to ripple through global trade. The average U.S. tariff rate now stands at 15.8%, the highest in nearly nine decades, according to

“Tariff hikes are typically stagflationary shocks—they simultaneously increase the probability of an economic slowdown while putting upward pressure on prices,” Sløk wrote in Apollo’s Mid-Year Outlook. Apollo has raised its U.S. recession risk to 25% over the next 12 months, up from 0% before the tariff policy was announced. Consumer confidence remains historically weak, corporate capex plans have turned volatile, and earnings forecasts are increasingly murky.

Yet in a more recent note, Sløk floated a provocative theory: Trump’s tariff strategy might actually be a calculated long game. Writing in The Daily Spark, he speculated that the administration could maintain 30% tariffs on China and 10% on other countries while giving trade partners a year to lower barriers—thereby boosting U.S. negotiating leverage and raising $400 billion in tax revenue annually. “Maybe the administration has outsmarted all of us,” Sløk wrote.

If extended, the plan could reduce uncertainty, support business planning, and potentially ease financial market stress. But until that’s clear, Sløk cautions, policy volatility will continue to weigh on growth expectations and investor confidence.

Supreme Court Ruling and Presidential Policy Add to Market Tension

Adding to the legal and political crosswinds, the U.S. Supreme Court issued a major ruling curbing federal judges' authority to issue nationwide injunctions, a victory for the Trump administration as it attempts to restrict birthright citizenship. While the decision did not allow the executive order to take effect immediately, it signals the Court’s conservative majority may support further executive latitude in future immigration and administrative matters.

Simultaneously, the White House left the door open to extending the July 9 tariff deadline. “The July 8-9 dates for new tariffs are not critical,” said Press Secretary Karoline Leavitt, noting that President Trump could delay implementation or adjust rates depending on how talks progress.

Fed and Rates Outlook

With inflation expectations revised upward to 3.0% for year-end 2025 and tourism and housing showing signs of decline, Sløk projects only one Fed rate cut this year, placing the target fed funds range at 4.00%–4.25%. Fed Chair Jerome Powell is expected to maintain a conservative posture amid fears of “runaway inflation,” according to Apollo.

Today’s midday market strength underscores investors’ search for stability amid ongoing trade tension and legal developments. With U.S. GDP growth expected at just 1.2% and inflation risks rising, portfolio strategy may increasingly hinge on sector selection, cash flow resilience, and policy adaptability.