Happy Friday, investors. Today’s the first full day in President Trump’s latest iteration of a trade war, but the response from Wall Street has been lukewarm. Today we’re unpacking why.

Looking beyond Liberation Day

President Trump’s new tariff regime is officially underway but markets have barely flinched. 

On Thursday, sweeping new levies took effect to lift the US’ effective tariff rate to the highest in a century at around 20%. Just a few months ago, similar news catalyzed a historic sell-off.

Yet now the trade war barely stirs any additional trading volatility.    

“IT’S MIDNIGHT!!! BILLIONS OF DOLLARS IN TARIFFS ARE NOW FLOWING INTO THE UNITED STATES OF AMERICA!” Trump wrote on Truth Social. 

The VIX — Wall Street’s fear gauge — remains well below its long-run average, and the S&P 500 saw a tiny dip Thursday but remains positive for the week. 

“The idea that the market rally was predicated on the TACO [“Trump always chickens out”] trade is at best outdated, meaning we’ve moved on to other driving factors,” said Steve Sosnick, chief strategist at Interactive Brokers.

“Or [it] was never the motivator that many had thought.”

To that point, investors who bailed during the April Liberation Day sell-off have missed a sharp rebound.

That strength has persisted in the months since Trump’s initial tariff announcement, and it’s evolved into a kind of trade war complacency on the part of investors. 

Once seen as the definitive macro risk, tariffs have been downgraded to background noise or political theater, depending who you ask. 

Now, it’s not that tariffs won’t have economic consequences. Indeed, they’re the main reason the Fed hasn’t cut interest rates this year, according to Jerome Powell.

In his view — which Opening Bell Daily disagrees with — higher import costs risk nudging inflation higher, particularly if some countries retaliate more than expected. 

That said, markets continue to bet that corporate earnings and AI momentum will carry stocks higher anyway. 

“Our base case remains that the US effective tariff rate will settle at around 15%,” said Ulrike Hoffmann-Burchardi, Global Head of Equities for UBS Wealth.

”Enough to weigh on growth and lift inflation, but not enough to derail the US economy or the equity rally.”

Market snapshot

Elsewhere

🏦The president will nominate his top economic advisor to the Fed. Stephan Miran is the head of the White House Council of Economic Advisers, and Trump said he’s tapping him to fill a vacancy on the central bank’s board of governors on a short-term basis. (WSJ)

🇨🇳Trump called for Intel’s CEO to step down. He said the exec is highly “CONFLICTED” and “must resign, immediately.” The demand appeared to stem from a senator’s letter sent to Intel’s board raising questions about the CEO’s links to Chinese firms, and national security issues. The stock fell 3%. (Barron’s)

📈Firefly Aerospace stock surged in its IPO. The stock opened at $70 a share on its first day of trading after pricing its shares at $45. It soared more than 36% Thursday, and follows Figma’s strong IPO the week prior. (CNBC)

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Rapid-fire

• Fed Governor Waller has emerged as the favorite to succeed Powell as Fed Chair (Bloomberg)

• OpenAI launched its new GPT-5 model for all ChatGPT users (CNBC)

• The latest AAII investor sentiment survey showed bearish views on stocks the next six months rose double digits (AAII)

• Prediction markets see 13% odds Powell’s out as Fed Chair before 2026, down from 30% a month ago (Kalshi)

• Atlanta Fed President Bostic said risks to the job market are climbing but it’s still too soon to decide on rate cuts for September (Reuters)

• Bitcoin is officially coming to retirement accounts (Pomp Letter)

• Duolingo stock has outperformed bitcoin over the last 12 months (LinkedIn)

• Wall Street hasn’t bought into Apple’s $600 billion investment in America (Opening Bell Daily)

• President Trump ordered the census to exclude undocumented immigrants (WSJ)

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Last thing

About me

📰 I’m Phil Rosen, co-founder and editor-in-chief of Opening Bell Daily. I’ve published books, lived on three continents, and won awards for my journalism, which has appeared in Business Insider, Fortune, Yahoo Finance, Bloomberg and Inc. Magazine.

I write our flagship newsletter to prepare you for each trading day — unpacking markets, economic data and Wall Street with analysis you won’t find anywhere else.

Feedback? Reply to this email, ping me on X @philrosenn, or write me directly at [email protected].

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