'Too late to panic': Wall Street strategists warn messy tariff fallout won't go away anytime soon

The vibes on Wall Street tanked this past week after President Trump’s aggressive tariff rollout sparked recession fears and pushed markets to the brink. The Nasdaq (^IXIC) ended the week in bear market territory, while the Dow (^DJI) entered correction and S&P 500 (^GSPC) logged its worst five-day stretch since 2020.

But one strategist advised against knee-jerk reactions with the fallout of Trump’s tariffs still yet to play out.

“It’s too late to panic,” Ed Yardeni, president of Yardeni Research, told Yahoo Finance on Thursday.

Yardeni, who has a year-end S&P 500 target of 6,100, said it will take time — likely several months — for the full impact of tariffs to play out in the market. Possible negotiations and the impact of retaliation from other countries serve as the biggest catalysts in either direction, according to Yardeni, as investors continue to seek further clarity.

On Friday, Beijing retaliated with a slew of countermeasures, including an additional 34% tariff rate on all US goods. That matches the reciprocal tariff rate the US levied on China earlier this week, and will arrive on top of the 10% to 15% tariffs the country levied on roughly $21 billion worth of US agricultural trade last month. Stocks escalated losses in the immediate aftermath of the news.

“It’s ironic that so many people thought that so-called ‘Liberation Day’ would be peak uncertainty,” Yardeni said. “But I don’t think that’s the case at all. I think there’s still plenty of uncertainty about how all this plays out.”

Live: The latest developments and reactions to President Trump’s tariffs

Heading into Wednesday’s “Liberation Day,” the massive scope and intensity of Trump 2.0 tariffs had been underestimated by investors, despite the consistent promises from Trump on the campaign trail.

In 2024, then-presidential candidate Trump pledged to impose blanket tariffs of at least 10% on all trading partners.

That promise materialized Wednesday (and then some) when the president slapped reciprocal tariffs on countries around the world, with the new levies ranging from a 10% “baseline” tariff to additional duties for nations the administration considers to be the “worst offenders.”

All told, Trump announced tariffs that will impact some 185 countries, including the United States’s largest trading partners, in a move that has sent markets reeling.

“The problem is the execution of it,” RSM chief economist Joe Brusuelas told Yahoo Finance on Friday. “That nonsensical introduction of the formula. It’s the loss of credibility on the part of the administration, the loss of confidence of markets in them — that’s what’s causing this.”