Impact of Tariffs on Inflation: Letting Price and Timing Confirm the Trade, Not Headlines
- Apr 4
- 5 min read
In today’s trading world, few headlines stir as much reaction as the announcement of new tariffs. They strike a nerve with investors, spark instant volatility, and fill airwaves with endless speculation. But if there’s one lesson Steve has reinforced over decades of trading through noisy markets, it’s this: price and cycle timing matter more than headlines.
That principle is more relevant than ever today, as the market absorbs the impact of aggressive new tariffs—and begins to feel the inflationary ripple effects. But instead of chasing headlines, we step back and ask a more disciplined question: “What were the cycles already telling us?”
Why the Impact of Tariffs on Inflation Feeds the Wrong Trading Decisions
Tariffs are inflationary. That’s not up for debate. When the cost of importing goods increases—whether it’s vehicles, electronics, or steel—those added costs ripple through supply chains and hit consumers directly. The most common result? Rising prices.
Take cars, for example. When tariffs were announced on foreign-made vehicles, economists estimated that U.S. car prices could jump $4,000 to $15,000 depending on the make and model. That’s a steep tax for the average American—and it doesn’t stop at cars. Increases follow across sectors: household goods, semiconductors, machinery, even food.
But inflationary pressure doesn’t automatically equal market collapse. That’s where traders get it wrong.
Traders who assume that inflation always leads to a crash may be ignoring the bigger picture: cycle structure. Inflation may accelerate a move that was already underway—but it rarely initiates a new trend. And when you trade on headlines instead of cycle confirmation, the odds are against you.
That’s why Steve emphasizes the importance of not jumping on news events without alignment in the trend and timing. The cycles always set the stage. Headlines only speed things up—or slow them down.
Let Price Confirm What the News Tries to Explain
Here’s where Steve’s approach flips the script: while most traders look to the news for direction, we use price structure and crossover confirmation to determine action.
Tariff announcements are loud. But what’s more important is:
Are intermediate and long-term cycles rising or falling?
Is price confirming that movement by breaking through a key level?
Is the 2/3 or 3/5 crossover average holding?
For example, a 25% tariff on key goods may create temporary volatility. But if price hasn’t broken above the crossover average, and cycles remain in decline, there’s no valid entry. It’s noise, not signal.
And when volatility surges—like we saw this week with UVXY up 36% and SQQQ up 16%—the headlines may have triggered the momentum, but the opportunity came from being in position before the reaction. That means using timing tools like the Visualizer to anticipate cycle peaks and waiting for crossover confirmation.
Trading the Reaction — Not the Panic
The most seasoned traders Steve ever met weren’t emotional. They didn’t panic in bear markets, and they didn’t chase bullish news either. They had a system, they followed the rules, and they let volatility work for them.
In times like these—when tariffs rattle the markets and inflation concerns rise—those rules become essential:
If cycles are declining and price confirms, we consider inverse ETFs like SQQQ, SH, or UVXY.
If cycles are rising, we ignore bearish headlines unless crossover confirmation breaks down.
If no confirmation is present, cash is a position—and a powerful one.
Inverse ETFs aren’t long-term plays. They’re tools to trade a fast-moving decline—tools that require tight stops, sharp timing, and discipline. Waiting until the VIX spikes or headlines confirm the panic is too late. By that point, much of the move is already behind you.
The real profit comes from positioning early—based on cycle turns and price behavior, not fear.
Check our post on Impact of Tariffs on Stock Market: Why We Let Price and Cycles Confirm the Trade, Not the News for more info.
People Also Ask About the Impact of Tariffs on Inflation
How do tariffs affect inflation?
Tariffs raise the cost of imported goods, which in turn pushes up prices for consumers. Domestic producers often respond by raising prices as well, resulting in broad-based inflation. This ripple effect hits across sectors—from cars and electronics to food and clothing.
Why does inflation matter to stock market traders?
Inflation can reduce consumer spending and corporate margins, leading to weaker earnings and lower stock prices. But more importantly, traders should recognize that inflationary pressure is often a catalyst, not a cause. Trading decisions should still be based on trend and timing—not just macro data.
Should traders react immediately to tariff announcements?
No. Steve’s philosophy emphasizes that cycles and price confirmation must come first. Headline news may accelerate price action, but trades should only be taken when aligned with trend direction and crossover confirmation.
How can inverse ETFs be used during inflationary market phases?
Inverse ETFs like SQQQ or SH can be used to profit from a market decline during inflationary phases—but only if cycles are falling and the price holds above the relevant crossover averages. They are tactical tools—not buy-and-hold instruments—and require precise risk management.
Is staying in cash during tariff news a smart strategy?
Yes. When the setup is unclear, cash protects capital and keeps you emotionally grounded. It’s a valid position—especially in volatile markets—because it allows you to avoid reactive trades and wait for a clear cycle-aligned entry.
Resolution to the Problem
The problem isn't the tariffs themselves—it's the temptation to trade based on emotion. Tariffs and inflation are part of the market’s backdrop, but they are not reliable signals. The real edge comes from anticipating market direction based on cycle analysis and price confirmation.
That’s why Steve’s method focuses on structure, not speculation. We know that markets were already in decline, and inflationary news merely amplified the momentum. The solution? Follow the trend, wait for confirmation, and avoid the emotional traps that headlines create.
Join Market Turning Points
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Conclusion
The impact of tariffs on inflation is real—but that doesn’t mean it should drive your trades. Let others chase the headlines. We’ll stick to the strategy that works: trading with discipline, confirming with cycles, and letting price lead the way. When price, timing, and trend are aligned, you don’t need to guess—you just need to act.
And when they’re not? Cash, not chaos, becomes your best move.
Author, Steve Swanson