President Donald Trump and his advisers claim this was the plan all along: Announce astronomically high tariffs, get countries to come to the negotiating table, and — with the exception of China — then back off in order to work out new trade agreements.
But Trump’s 90-day pause on his “reciprocal” tariffs gives the administration just three months to strike enormously complex trade deals with dozens of countries.
Financial markets aren’t buying it. Stocks have whipsawed as volatility has spiked. And other markets are sending a clear message of deep skepticism that Trump will be able to pull this one off.
Where things left off Friday: Following another steep sell-off Thursday, stocks appeared calmer — for now — and posted strong gains Friday.
The Dow ended the day higher by 619 points, or 1.56%. The S&P 500 rose 1.81% and the Nasdaq was 2.06% higher.
But warning signs continued flashing from other markets, including oil, bonds and the dollar. And investors have been trading on a knife’s edge, with any announcement from Trump liable to send stocks surging or tumbling.
What comes next: The Trump administration is voicing optimism, saying dozens of countries have reached out to strike a deal. The administration is providing few details on any ongoing talks, but has said it will favor allies like South Korea and Japan first.
But trade deals are incredibly complex arrangements usually negotiated over the course of years, not months.
China looms: Even if Trump struck deals with all those countries over a short period, China — the world’s biggest exporter — remains the elephant in the room.
Beijing is locked in a tit-for-tat battle with Washington, with Trump not only excluding China from his tariff pause but also raising tariffs on the country to at least 145%.
Chinese leader Xi Jinping said he is “not afraid” in his first public comments on the escalating trade war, and has raised tariffs on US goods to 125%.
