President Donald Trump and his advisors have argued that this is a plan forever. Announce astronomically high tariffs, make the country come to the negotiation table, and with the exception of China, retreat to settle new trade agreements.
But Trump’s 90-day suspension on “mutual” tariffs will have the administration attacked extremely complex trade deals with dozens of countries in just three months.
The financial markets are not buying it. The stock was whipped as volatility spiked. And other markets have sent a clear message of deep skepticism that Trump could pull this off.
Where uninterrupted on Friday: Following another sudden sale on Thursday, the stock looked calm for now, with strong profits on Friday.
The Dow finished the day with 619 points, or 1.56%. The S&P 500 rose 1.81%, while the NASDAQ was 2.06% higher.
However, warning signs continued to flash from other markets, including oil, bonds and dollars. And investors are trading on the edge of the knife, and the announcement from Trump is responsible for the stocks to spike or fall.
What comes next: The Trump administration has expressed optimism, saying dozens of countries have reached out to make a deal. The administration has provided little details about the ongoing consultations, but it has initially said it supports allies such as South Korea and Japan.
But trade transactions are very complicated arrangements that are usually negotiated over several years rather than months.
China’s loom: Even if Trump has done business with all countries for a short period of time, China (the world’s largest exporter) will remain the elephant in the room.
Beijing is trapped in a fierce battle with Washington, and Trump will not only exclude China from his suspension of tariffs, but will also raise the country’s tariffs to at least 145%.
Chinese leader Xi Jinping said in his first public comment on the spread of the trade war he was “not afraid,” raising tariffs on US goods to 125%.