Economist Jeremy Siegel said President Donald Trump’s tariffs on China are temporary and that, if they are lifted, stocks could hit “new highs.”
The market sell-off on Friday was triggered by Trump posting on Truth Social that China was “becoming very hostile” in trade talks. He said he would impose a 100% levy, “over and above any Tariff that they are currently paying.” The S&P 500 then closed 2.7% lower, its steepest decline since the bear run that followed April 2, when Trump introduced his “Liberation Day” tariffs.
Speaking on Monday before the opening bell, Siegel told CNBC that he thinks the latest development in Trump’s tariffs on China “is not going to be a permanent situation.”
“Once it’s resolved, given all the other good things that are happening, you know, I can see no reason why we can’t continue on to new highs,” the Wharton finance professor added.
Siegel predicted that China would try to negotiate a reduction in its current tariff rate, which averages 55% on exports to the US.
Stocks went on a bull run after recovering from the first tariff announcement in April, fuelled by growing hype surrounding AI, predicted interest rate cuts by the Federal Reserve, and hopes of further trade negotiations.
US stock market indexes have hit fresh records this year, with the S&P 500 reaching 6,754.49 and the Nasdaq Composite extending to 23,119.907 last week.
Stocks pared some of Friday’s losses after the opening bell on Monday.
The S&P 500 was up 1.5% to 6,652.14 points at noon ET on Monday, with the Nasdaq Composite up 2% to 22,662.84. The Dow Jones Industrial Average rose about 1.3% to 46,052.44.
Siegel says Bitcoin isn’t a good investment to protect against risk
Siegel gave his thoughts to CNBC on the investments that traders have turned to in recent months to weather uncertainty about global trade.
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He said bitcoin was a bad choice for investors looking to diversify for short-term risk because of the currency’s tendency to dive alongside US stocks. It dropped from over $120,000 to less than $110,000 during the day on Friday.
“Bitcoin was not a good diversifier in that shock,” Siegel said, referring to market volatility after tariff announcements in April.
“Gold held up, Treasurys went up at that point,” Siegel said.
Gold has also reached several historic milestones in 2025, passing a threshold of $4,000 per ounce for the first time last week.
The metal became a popular option for investors as a hedge against inflation and uncertainty at the end of 2024 before Trump’s inauguration.
