Classic 'TACO'? Investors shrug off Trump's latest tariff announcement

U.S. President Donald Trump's new blanket tariffs came into force on Tuesday — but investors appear to be shrugging the changes off, with one analyst telling CNBC they were "bigger issues."

Trump announced over the weekend a new, blanket 15% global levy on imports to the U.S. The president initially announced plans to impose a 10% duty on global imports, before saying that the rate would rise "to the fully allowed, and legally tested, 15% level."

The announcement came after the U.S. Supreme Court struck down Trump's country-specific tariffs — a source of major market volatility when they were first unveiled by the White House last April.

Section 122 of the 1974 Trade Act empowers the president to implement tariffs of up to 15% for up to 150 days.

Trump said in a Truth Social post that any country that wants to "play games" with the Supreme Court decision "will be met with a much higher tariff."

Despite Trump saying there would 15% tariffs, the new levies came into effect at 10% on Tuesday. A customs notice from U.S. Customs and Border Protection said the temporary Section 122 duties meant "an additional 10% ad valorem duty on imported articles of every country for a period of 150 days, unless specifically exempt."

In Europe, equity markets were muted, with the pan-European Stoxx 600 rising above the flatline after initially notching losses at the open. Stocks reacted negatively on Monday to Trump's fresh tariff talk over the weekend, but the moves were a far cry from the Continent's deep sell-off after the president's first "liberation day" tariff announcements in April.

Stoxx 600

"I think people are now used to his little explosions," Paul Skinner, investment director in the London office of Wellington Management, told CNBC on a call, saying the market reaction was an example of the "TACO" or "Trump Always Chickens Out" trade.

The phrase refers to the president's history of threatening levies, only to ease, delay or cancel them. After Trump backed down on his "liberation day announcements, markets were more muted in response to later U.S. trade policy announcements.

Wellington has long held the view that U.S. tariffs will drift lower over time — and Skinner said Tuesday that this view had not changed in light of the latest announcements. The global asset manager sees the general tariff rate falling to around 9% by year's end.

"I don't think there's anything really market moving in what's happened … there's no surprises," he said. Skinner added that tensions over Iran were capturing more attention than "the path of tariffs, which I think is heading very much the way people were assuming."

Stocks in the Asia-Pacific region also lacked direction on Tuesday as investors digested tariffs. U.S. stocks were slightly up shortly after Tuesday's opening bell.

Toni Meadows, head of investment at U.K.-based BRI Wealth Management, said the Trump administration was "temporary." He said the president's new tariffs "yield more tariff revenue to the U.S., but that is ultimately a tax on the U.S. consumer that chips away at growth and increases inflation — but not enough to change a view."

"There are regional winners and losers if the regime sticks but let's not forget that there is a limited time horizon of a few months on this legislation, so the picture is likely to change. For now, countries like the U.K. lose out and China benefits but it is not an investable move," he added.

Meadows also told CNBC that investors have "bigger issues to grapple with," such as artificial intelligence.

"The move to a global tariff regime does nothing to end the uncertainty of U.S. trade policy, so the market will largely ignore it for now and the total sums are not a game changer," he added. "For now, some might try to 'day trade' Trump's policy changes, but not long-term investors."

Paul Surguy, managing director and head of investment management and proposition at Kingswood Group, told CNBC the wealth management firm was keeping a holding pattern on tariff news.

"There is simply no clarity on which one can make an informed decision," he said. "In terms of tariff politics, history would suggest that where we are today is not where we might be tomorrow."

Carsten Brzeski, global head of macro at Dutch bank ING, said that although tariffs came into force at the 10% rate, Trump's avowed rise to 15% was thought to be imminent.

He said the temporary Section 122 tariffs had come in at 10% because "probably someone must have told Trump" shortly afterward that the law actually allowed a tariff of up to 15%, "which is why he mentioned it on Saturday. But the services hadn't prepared any official executive order."

"Rumor has it that the folks at the White House are now working on a new order for the 15%. Consequently, we are now at 10%, but 15% should be coming shortly," Brzeski added.

Brzeski argued that the rate itself was no longer what mattered to investors, as it did in April.

"It is currently not so much the absolute level of tariffs [that counts] but rather the new uncertainty, both regarding what's next from Trump but also regarding whether the larger trading partners, particularly the EU, will try to renegotiate the bilateral deals from last year," he said.