Economist Jeremy Siegel believes the current market turmoil caused by President Donald Trump’s latest China tariffs will not last and that U.S. stocks could climb to new record highs once trade tensions subside.
Speaking to CNBC on Monday, the Wharton finance professor said he sees the 100% tariffs on Chinese imports as “not a permanent situation” and expects both sides to eventually negotiate. “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 said.
The comment came after Trump’s post on Truth Social late last week, in which he accused China of “becoming very hostile” and threatened to impose massive new tariffs “over and above any tariff that they are currently paying.” The statement triggered a broad market sell-off, with the S&P 500 dropping 2.7% its sharpest single-day fall since the market correction that followed April’s “Liberation Day” tariffs.
By Monday morning, however, Siegel’s optimism seemed to reflect broader market sentiment. The S&P 500 rebounded 1.5% to 6,652.14, the Nasdaq Composite rose 2% to 22,662.84, and the Dow Jones Industrial Average gained 1.3% to 46,052.44 by noon ET.
Siegel, long known for his bullish outlook on U.S. equities, said the latest tariff escalation should be viewed as a temporary disruption rather than the start of a lasting trade breakdown. He expects China will soon push for a reduction in its current average tariff rate of 55% on exports to the U.S.
He also pointed out that the underlying market fundamentals remain strong. Following the brief April sell-off, stocks surged to record levels, driven by AI enthusiasm, expectations of Federal Reserve rate cuts, and renewed hopes for trade progress. The S&P 500 recently reached 6,754.49, while the Nasdaq Composite hit a record 23,119.90.
With those factors still in play, Siegel believes markets could continue their upward march once the tariff issue is resolved. “If you lift this cloud of uncertainty, we could very well see a new leg higher,” he said.
While much of Wall Street remains focused on inflation data and interest rate policy, the return of trade tensions with China has introduced a new variable. Still, Siegel’s long-term view remains intact he sees strong U.S. corporate earnings, easing monetary policy, and robust consumer demand as the key forces that will push stocks higher through year-end.
“The fundamentals for the market are solid,” he said. “I don’t see a recession on the horizon, and the AI-driven productivity gains are real. Once this tariff overhang clears, I expect investors to refocus on those tailwinds.”
On the topic of alternative assets, Siegel had a clear message: Bitcoin is not a safe haven.
Following Friday’s market shock, Bitcoin dropped from over $120,000 to below $110,000, mirroring the equity sell-off. “Bitcoin was not a good diversifier in that shock,” Siegel said, emphasizing that the cryptocurrency behaves more like a speculative asset than a true hedge.
Instead, traditional safe havens held their ground. “Gold held up, Treasurys went up,” Siegel noted. Gold prices have surged in 2025, surpassing $4,000 per ounce for the first time driven by inflation worries, central bank demand, and geopolitical uncertainty since the end of 2024.
For Siegel, that divergence underscores a familiar truth: when market volatility spikes, investors still prefer assets backed by historical trust. “Gold and Treasurys are still the go-to instruments when fear takes over,” he said.
As Trump’s tariff drama plays out, Siegel’s message is one of cautious confidence. The tariffs may cause turbulence, but he believes they’re negotiation tactics, not lasting policy. And once the noise subsides, the U.S. stock market’s bull run fueled by AI innovation, lower interest rates, and resilient demand could resume its climb toward new highs.
