Paul Tudor Jones, founder of macro-focused hedge fund firm Tudor Investment Corporation, expects US President Donald Trump to reduce tariffs on Chinese goods by 50%, but says such a move may not be enough to prevent equity markets from retesting recent lows, according top a report by Bloomberg.
Speaking on CNBC on Tuesday, the veteran macro trader cautioned that a combination of entrenched Fed policy and aggressive trade levies poses a double threat to risk assets.
“You have Trump, who’s locked in on tariffs; you have the Fed, who’s locked in on not cutting rates — that’s not good for the stock market,” said Jones, whose firm has long profited from trading global economic shifts and policy pivots.
Jones, 70, said he’s “sure” Trump will eventually reduce the current China tariffs — which peaked at 145% on certain goods — by half, calling the levies “the largest tax increase since the 1960s.” Still, without a doveish pivot from the Federal Reserve, Jones warned investors should brace for further downside: “You’re probably going to new lows.”
Markets were rattled throughout April by Trump’s tariff announcements, with the S&P 500 plunging over 12% in just four sessions. A recent 90-day pause on the most punitive measures has helped restore some calm, but Jones suggested that only a coordinated response from the White House and the Fed could put a durable floor under risk assets.
Jones praised the intent behind the tariff push – aimed at addressing long-standing trade imbalances – but questioned its execution. “Tariffs used surgically would have been great,” he said. “But not to the extent they’ve been deployed.”
