Trump’s Tariff Policy: Economic Impact vs Market Expectations

Trump defends tariffs but leaves room for negotiation

In his latest speech, President Trump warned that the U.S. economy could face disruptions due to the tariffs he intends to impose. However, he emphasized that these measures would generate trillions of dollars for the U.S. and reshape America’s trade relations, which he deems “unfair.” While acknowledging potential short-term disturbances, Trump stated that his administration is prepared to support the industrial sector by fast-tracking approvals for companies to build factories in the U.S. and offering tax exemptions to encourage domestic production.

Despite defending the tariff policy, Trump did not rule out the possibility of negotiating trade agreements with targeted countries. The markets interpreted this as a sign that tariffs might ultimately be avoided, leading to a decline in the U.S. dollar and a rise in precious metals like silver, which typically move inversely to the dollar.

Why would Trump prefer Trade Agreements over Tariffs?

The tariffs proposed by a potential second Trump administration would be significantly larger than those imposed during his first term, potentially raising import duties to their highest levels since 1943. A major downside is that they could increase the cost of living by approximately $2,000 to the US household, potentially slowing economic growth—especially if affected countries retaliate with tariffs on U.S. goods. Given these risks, securing trade agreements may be a more viable option to balance economic stability and fair trade.

Silver price outlook: Unclear direction amid market uncertainty

On February 20, silver prices corrected their upward trend, forming a lower high at $33.19 and shifting to trade in a sideways move. Before the end of the month, silver rebounded from the 50-day simple moving average and remained above the ascending trendline from the December 31 low of $28.76. Currently, prices may be heading toward a test of the $34.40 resistance level, though a potential pullback at the February 14 high of $33.38 should be considered.

Key levels to watch in a bearish scenario

If silver breaks below the 50-day moving average and the ascending trendline, it could signal a shift in momentum, with bears potentially driving prices down to $29.45. In this case, support at $30.67 should be watched closely.

Silver price – Daily Chart

Chart Source: ADSS Platform