Economist Jeremy Siegel has declared that President Donald Trump’s recent tariffs on China are temporary measures, predicting the stock market could surge to “new highs” once these trade restrictions are lifted. The Wharton finance professor’s analysis comes after Friday’s significant market sell-off triggered by Trump’s announcement of additional 100% tariffs, which caused the S&P 500 to experience its steepest decline since April.
Market Volatility and Tariff Impact
The recent market turbulence began when President Trump posted on Truth Social about China becoming “very hostile” in trade talks, prompting immediate investor concern. The S&P 500 closed 2.7% lower following the announcement, reflecting how sensitive markets remain to tariff developments. However, Siegel emphasized during his Monday CNBC appearance that this situation represents a temporary disruption rather than a permanent shift in trade policy.
“Once it’s resolved, given all the other good things that are happening, I can see no reason why we can’t continue on to new highs,” Siegel stated, pointing to underlying economic strengths that could propel markets upward once trade uncertainties clear.
Recovery Patterns and Bull Market Drivers
Stocks demonstrated remarkable resilience on Monday, paring back Friday’s losses with the S&P 500 rising 1.5% to 6,652.14 points by midday. This recovery pattern mirrors the market’s response to earlier tariff announcements in April, when stocks embarked on a substantial bull run fueled by multiple positive factors:
- Growing excitement surrounding artificial intelligence investments
- Anticipated interest rate cuts by the Federal Reserve
- Ongoing hopes for productive trade negotiations
The current AI investment boom has been particularly significant, with industry experts noting unprecedented capital flowing into artificial intelligence technologies that could transform multiple sectors.
Investment Strategies During Trade Uncertainty
Jeremy Siegel also provided crucial insights about investment choices during periods of trade-related volatility. He specifically cautioned against using bitcoin as a short-term diversifier, noting its tendency to decline alongside US stocks during market shocks.
“Bitcoin was not a good diversifier in that shock,” Siegel observed, referencing the cryptocurrency’s drop from over $120,000 to below $110,000 during Friday’s tariff-induced sell-off.
Instead, Siegel highlighted more reliable safe-haven assets:
- Gold maintained its value during the volatility
- Treasury bonds appreciated as investors sought safety
Gold has particularly distinguished itself in 2025, surpassing the $4,000 per ounce threshold for the first time last week as investors continue seeking protection against inflation and geopolitical uncertainty.
Broader Economic Context and Workforce Trends
The tariff developments occur within a complex economic landscape where multiple factors influence market performance. According to recent analysis, workforce dynamics continue evolving with remote work preferences affecting corporate strategies nationwide.
Meanwhile, additional coverage indicates that energy sector improvements are contributing to economic stability, while related analysis shows technology companies enhancing customer service capabilities through AI integration.
Outlook for Trade Resolution and Market Performance
Siegel predicts that China will likely seek negotiations to reduce the current average 55% tariff rate on exports to the United States. The finance professor’s optimistic outlook hinges on his assessment that current trade tensions represent negotiating tactics rather than fundamental policy shifts.
With US stock indexes having reached record levels earlier this year—the S&P 500 hit 6,754.49 and the Nasdaq Composite extended to 23,119.907—the foundation for continued growth remains strong according to Siegel’s analysis. The key catalyst for reaching new market highs appears to be resolution of the temporary tariff measures that currently weigh on investor sentiment.
