Cramer: Trump's tariffs are 'pure chaos' but the stock market is still up. Here's why

CNBC

a day ago

No "sell in May and go away" this year. In fact, the stock market has powered higher this month despite new and confusing tariff headlines lurking around every corner. President Donald Trump 's latest trade drama emerged Friday morning when he accused China of violating the preliminary trade agreement reached with the United States on May 12. Around noon ET, Bloomberg reported the Trump Administration was planning to broaden restrictions on Chinese tech companies. Later in the afternoon, at an Oval Office event to thank Elon Musk for his government service, Trump said he would be open to talking to Chinese President Xi Jinping. All this came after Treasury Secretary Scott Bessent described U.S.-China trade negotiations as being "a bit stalled," during a Fox News interview Thursday evening. And, just a day before that, a U.S. trade court ruled that Trump had overstepped his authority by invoking an emergency law to implement far-reaching tariffs on foreign countries. The Trump administration, in turn, filed a notice of appeal shortly after, allowing the tariffs to remain in place until next week. "I get the sense the president doesn't understand all the turmoil [he's creating,]" Jim Cramer said Friday. He described the tariff situation as "pure chaos," but said "the stock market is up." Case in point: Although the S & P 500 was flat Friday on the trade policy confusion, the benchmark index is on track for a nearly 6% gain in May. The tech-heavy Nasdaq is poised to gain almost 9% for the month. Trump's accusation against China on Friday is one of a laundry list of trade developments in May — some good, some bad. As for the positives, the U.S. and China agreed to a 90-day pause on the majority of tariffs imposed on each other's goods on May 12. A few days before that, the president unveiled a broad outline of a trade agreemen t with the United Kingdom. The deal left in place Trump's 10% tariffs on British exports but expanded agricultural access for both countries. The Financial Times reported Thursday that Britain will hold talks with the U.S. next week to expedite the process. On Sunday, Trump delayed the 50% tariffs on European Union imports until July 9. Only days earlier, he announced them with a June 1 start date. On the other side of the coin, Trump also threatened Club name Apple with a 25% or higher tariff rate on iPhones made outside of the country last Friday — demanding the tech behemoth move its manufacturing to the U.S. as soon as possible. That's a tall order for Apple, given it makes most of its devices overseas. In fact, the majority are still produced in China. The company has been trying to move more and more iPhone production to India. So, given the erratic trade headlines over the past month, how is the market still managing its gains? Investors are focusing on signs of resilience in the U.S. economy instead, according to Jim. Job growth, for example, was stronger than expected in April despite worries about the impact of Trump's tariffs. "Employment is mitigating what we're seeing," he said Friday. Meanwhile, the latest reading of the Federal Reserve's preferred inflation gauge indicated that price increases in April slowed as well. Club holding Costco is another great barometer for the health of the consumer. On Thursday, the company delivered a solid quarterly earnings report. Margins were better than expected, quieting the fears going into the print about a tariff-driven hit. "People are going there. They're saving money, but the fact is they're [still] spending money." Jim said. COST YTD mountain Costco Wholesale (COST) year-to-date performance Overall, Jim said it feels like our portfolio companies are "under fire when they're doing so much." Take Costco, for example. During its Thursday earnings call, management outlined tweaks it has made to its supply chain to mitigate tariff impact and try to keep prices in check. "Are the people from the administration on any conference calls? Because if they did, they'd know this mad dash away from China is 'unmitigated,'" Jim said. "Our companies are being so great about moving out of China, and it would be terrific to see them hailed as great." He added, "This is when the president should come out on Truth Social and say, 'Congratulations Costco.' They're keeping prices down." The same can be said for Apple, which has tried to get on Trump's good side but with little success. Earlier this year, Apple announced a $500 billion investment in U.S. development over the next four years. CEO Tim Cook also donated $1 million to the president's inauguration fund for his second term. Still, Apple faces the threat of a huge hike in its costs. By some Wall Street estimates, iPhones could cost nearly $3,500 apiece if they're made in the U.S. This would, in turn, weigh on demand for Apple's flagship offering and its biggest money maker. "The president is creating hurdles everywhere," Jim said. But for now, at least, the stock market seems to be rolling with the punches. (Jim Cramer's Charitable Trust is long COST, APPL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.