The headlines are hailing and cheering lower petrol prices for motorists across the Easter and Anzac holiday weekends, but these are celebrations for a lesser achievement than what lower fuel slugs mean for a bigger picture.

More significantly, Trump’s tariffs have created a probable scenario that means lower petrol prices means lower inflation, and that means more chances of interest rate cuts!

In turn, that boosts confidence (both consumer and business), works against recession threats and is a big plus for stocks, as well as our super. So, this is a positive spin-off from the excessiveness of the Trump tariffs. Now we have to hope that the following happens to help this positive picture materialise:

1. Trump must avoid any crazy decisions that spook both stock and bond markets.
2. Gradually tariff deals between the US and trading partners show up.
3. The market believes trade deals, especially one with China, become possible.
4. The Federal Reserve and other central banks read the economic tea leaves and move quickly enough to avoid a significant slowdown because of tariff uncertainty.

Behind this expected sustained fall in petrol prices is the tariff turmoil and the fears that a trade war will lead to a global recession and a reduced demand for energy.

The SMH’s Nick Toscano aptly explained what we’re seeing with this: “The cost of crude oil, which is refined into petrol and diesel, has tumbled nearly 15 per cent in two weeks to levels not seen since 2020-21 when COVID-19 shutdowns confined billions of people to their homes and wiped out fuel usage globally.”

The national average price of unleaded petrol has tumbled to $1.79 a litre but who can’t remember seeing prices topping $2 in recent times? Helping KO high prices has been the surprise increase in supply from OPEC+ that has brought Brent crude down from $US75 or $119 a barrel to $US65 or $103 over May.

It looks like our oil producing buddies don’t want to cook their global customers as Trump and his team threaten tough economic actions to get their way. Fortunately for the world, the bond market effectively said to the US President that enough is enough, or as Robert De Nero might say in a Martin Scorsese film: “If you’re gonna mess with me, well, I’m goin’ mess with you!”

Trump moves going forward will be more measured and thought through, though his dealings with China could be brutal, and potentially could worry stock markets in particular. If Trump was more predictable, I’d be happy to invest confidently, but with stocks up two days in a row on Wall Street, I’m only cautiously believing that a positive road lies ahead for economies, stock prices and interest rates.

Overnight, US stocks went up on the back of the tariff exemptions announced for iPhones and other hi-tech products produced by US companies but in China. The more tariff concessions we see from the Trump team and the more trade deals are achieved, the more stock markets will be positive.

We’re in Trump’s hands, but we will get help from central banks via rate cuts if he overplays his hand, because they’d be more worried that his tough trade plays are increasingly likely to create a recession than the rampant inflation we saw when Covid killed global supply in 2020-21.

According to money market calculations, right now the US central bank is 74% certain to cut interest rates in June, while the likelihood of us getting a rate cut in May looks done and dusted. Only silly promises from desperate politicians between now and May 2 could cancel that cut!