Tariff shock temporary, fundamentals will prevail: Peter Cardillo

Synopsis

Peter Cardillo analyzes Trump's tariff threats, particularly regarding pharmaceuticals, deeming 250% tariffs infeasible and unsustainable, viewing them as negotiation tactics. He also discusses potential agreements between the U.S., India, and Russia concerning energy, anticipating a balanced approach. Despite tariff-induced market volatility, Cardillo believes strong market fundamentals will ultimately prevail.

"A 200% or 250% tariff? That would force countries exporting pharmaceuticals to the U.S. to shut down operations—that's just not feasible. Could something like this go into effect briefly, for a week or two? Possibly. But it won’t be sustainable," says Peter Cardillo, Spartan Capital Securities.

What do you make of the latest announcements on the tariff front? Trump is saying tariffs could go up to 250%. What do you make of these comments?
Peter Cardillo: Well, obviously, Trump is once again putting on pressure and threatening steeper tariffs so that, eventually, he can strike deals—especially with countries like India. Whether or not those steep tariffs will actually be implemented, I’m not certain. I think we’ll eventually see lower tariffs being imposed. He also says he's collecting trillions and trillions of dollars, and yes, that may be true. But let’s not forget—even a baseline tariff of 10% or 15% is inflationary. So yes, he may be paying down debt, as he claims, and the trade deficit may shrink, giving a false impression of economic activity. But consumers are unlikely to spend the way they were six months ago, simply because prices are now higher.

He also mentioned tariffs on pharmaceuticals—saying they’ll be raised to 150% in the next week or so, and eventually to 250% within a year. Is that even realistic? What kind of impact would that have on U.S. inflation? Is 250% really feasible?
Peter Cardillo: No, absolutely not. These are just threats. A 200% or 250% tariff? That would force countries exporting pharmaceuticals to the U.S. to shut down operations—that's just not feasible. Could something like this go into effect briefly, for a week or two? Possibly. But it won’t be sustainable.

Shifting focus to energy now. Trump has made statements about potential sanctions on countries purchasing Russian energy. At the same time, India’s NSA, Ajit Doval, is currently in Russia for strategic meetings. How do you see this scenario unfolding? Trump is also expected to speak with Russian officials. What could be the possible outcomes of these meetings—between Russia and India, and separately, Russia and the U.S.?
Peter Cardillo: They’ll likely reach some sort of agreement. I don’t think India is going to stop trading with the United States—it will continue to do so. Will it also trade with Russia for oil? Probably. But perhaps there will be a split—India might source some oil from the U.S. as well, instead of relying solely on Russia. A mutual agreement is likely. What we’re witnessing isn’t just a war of tariffs—it’s a war of words. Eventually, some sort of resolution will emerge. Of course, this rhetoric can weigh heavily on the markets—not just in India or the U.S., but globally. However, if you look at global markets, most are focused on the fundamentals, and earnings have been very strong. So yes, you might see a one-day pullback due to tariff threats or related developments, but ultimately, investors focus on fundamentals. That’s what will play out over the next few weeks, even as Trump announces tariffs on chips and pharmaceutical products. You may get one or two days of market volatility, but in the end, those steep tariff threats will push trading partners to the negotiating table.

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