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There is absolute carnage out there. Markets across the globe are in freefall after President Trump doubled down on his commitment to broad-based tariffs, stating he would only “make a deal” with other countries if they “solve their trade surpluses” and “pay a lot of money” to the U.S. “These deficits are not sustainable and were one of the biggest reasons I got elected,” Trump declared aboard Air Force 1. “I don’t want anything to go down, but sometimes you have to take medicine to fix something.”
Trade negotiations: “Just so you understand the power of what I’m doing, every country is calling and being very solicitous of us,” he continued, saying he spoke with five to six major European and Asian leaders over the weekend. Israeli Prime Minister Bibi Netanyahu has also arrived in Washington, and the recently announced 17% tariffs on his country will be on the agenda. Israel had cut all of its remaining tariffs on U.S. goods in the lead-up to Trump’s ‘Liberation Day’ announcement, so if any new framework is announced that can relieve some of the new duties, it might be followed as a template for other nations.
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A serious bout of selling is still taking place across the globe, with circuit breakers triggered in Asia and European stocks plunging another 6% at the open. Things don’t look any prettier based on futures movement in the U.S., where the Nasdaq joined the Russell 2000 in bear market territory on Friday as U.S. stocks lost a combined $5T in only two trading sessions. It also hasn’t helped that the Chinese government slapped a 34% retaliatory levy on all U.S. goods, as well as Fed Chair Jerome Powell’s stance to “wait for greater clarity before considering any adjustments to our policy stance.”
Commentary: “At the moment, escalation looks more likely than resolution and that supports a continued decline,” analysts at Matrix Trade wrote in a research note. “Several countries could remove tariffs in the coming days which would allow Trump to claim victory and say some soothing words to the markets. However, China and the E.U. are the most important trading partners, and markets are likely to stay on edge until deals are made with them.” Take the WSB survey.
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