While investors are assessing the potential impacts of the “One Big Beautiful Bill Act,” this expert is urging investors to look beyond and consider a more potent market mover — U.S. tariff policy.
What Happened: Bob Elliott, CIO of Unlimited Funds, warns that the stock market is “underpricing the downside risks of the tariff rates,” arguing that the nuances of this policy are “far more important” than the much-touted legislative package.
Even after a recent “China deal,” Elliott observed that “rates are still quite elevated,” leaving open the question of whether further relief is on the horizon or if the U.S. will “revert” to higher tariffs.
The economic impacts, he explained, could range from a “loosening that could largely be absorbed through the supply chain, to highly growth-disruptive tariffs, particularly if targeting key sectors.”
While China remains a pivotal factor, Elliott stressed that all the negotiated deals with other major trade partners also matter a lot, along with the possibility of various sectoral tariffs.
He acknowledged the inherent difficulty of negotiating trade agreements with “150 countries in 90 days,” suggesting the administration is increasingly recognizing this challenge and may opt to “simply set the desired rate sometime soon.”
With the 90-day “pause” roughly halfway through, Elliott lamented the persistent lack of clarity regarding the resolution of these tariffs.
He also said that “While strategic ambiguity and tough rhetoric are likely in part negotiating tactics, recent signaling suggests increasing comfort with elevated duties ahead.”
Elliott’s final warning to investors is stark: “Downside risks of the tariff rates ahead are underpriced at these levels.”
Why It Matters: Adding to the uncertainty, Elliott pointed to recent remarks from Treasury Secretary Scott Bessent, who “outlined a framework that suggested those countries not negotiating in good faith may see their tariffs rise back to Liberation Day levels.”
The new tax bill includes deductions on state and local taxes, social security benefits, tips, and overtime. The Congressional Budget Office estimated that this bill will add about $3.8 trillion to the federal government’s $36.2 trillion in debt over the next decade.
While tariff pauses remain in place, the tax bill has been advanced by the House Rules Committee in an 8-4 vote following a marathon 22-hour hearing.
Price Action: The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, rose on Thursday. The SPY was up 0.039% to $583.09, while the QQQ advanced 0.19% to $514.00, according to Benzinga Pro data.
On Friday, the futures of the S&P 500, Nasdaq 100, and Dow Jones indices were trading higher.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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