CNBC’s Jim Cramer on Monday told investors that President Donald Trump’s new slate of tariffs might not have staying power, and he cautioned against doing any major selling.
“We no longer believe that the tariff numbers the president’s throwing around are meaningful,” Cramer said, referring to his outlook for the CNBC Investing Club’s Chartable Trust. “They’re just a starting point for negotiations with countries that really need access to our markets.”
Stocks sank during the day’s session as investors recoiled after Trump announced steep tariffs on at least 14 countries set to take effect on Aug. 1. The Dow Jones Industrial Average lost 0.94% while the S&P 500 shed 0.79% and the Nasdaq Composite dipped 0.92%. In Monday Truth Social posts, the president shared screenshots of letters establishing new tariffs addressed to the leaders of Japan, South Korea, Malaysia, Kazakhstan, South Africa, Laos and Myanmar. Later in the day, he shared more letters to the leaders of Bosnia and Herzegovina, Tunisia, Indonesia, Bangladesh, Serbia, Cambodia and Thailand.
Cramer suggested that more sellers could emerge once the market digests these new tariffs, saying the market remains overbought. If more countries “refuse to play ball with President Trump on trade,” they might also get letters from the White House, he said, something Wall Street does not want to see.
But investors don’t know whether to take the tariffs seriously, he said, as there has has been little consistency with new trade policies. The Trump administration has repeatedly postponed or reduced tariffs, he continued, and the new regulations could be lowered as part of negotiations. Cramer also suggested that the president’s overall goal regarding tariffs isn’t to build new plants domestically, but to sell more goods overseas.
It will be “a bit of a problem” if the newly-announced tariffs are the final figures, Cramer said. But he added that few believe they will be, and he said they may not impact inflation or the Federal Reserve’s decisions on interest rates as much as some investors expect.
Aside from trade policy, Cramer said the measures in Trump’s megabill — which the House of Representatives passed last week — matter to the market. Although the bill will add trillions to the national debt, he said it’s full of provisions that will ignite the economy, like tax exemptions that could bring on a wave of construction.
“I don’t want to be glib. I know we’re staring down the barrel of a tariff gun,” he said. “But if I’m right that the president’s game plan is really to help our manufacturers export more merchandise, it’s hard to make the case that we need to do a really huge amount of selling here, unless you’re ringing the register on something that’s had a huge run, or something that’s a dog and didn’t move at all.”
