Donald Trump made headlines on Wednesday during an Oval Office event when he responded to a reporter’s question, labeling it “the nastiest question.” He participated in several two way conversations recently made announcement on schedule on tariff rates. These policy shifts together have the potential to reshape the EU and China, indeed, the world, in profound ways.
While at the event, Trump spoke directly to the intricacies of international trade negotiations and his recent tariff initiatives. This week, at least, he sounded open to delaying the tariff move. This reversal took place only after he began receiving requests for an emergency meeting from his EU counterparts to address the matter. This tactic is yet another show of Trump’s continued attempts to pull the strings through the complicated web that is international trade relations.
When U.S. markets reopened following the Memorial Day holiday, stocks jumped higher. This big progress came on the heels of Trump’s decision earlier this week to delay implementing the first round of tariffs. The President was particularly audacious in characterizing his approach as setting a “stupid low target” for tariffs. He contends that this strategy provides muscle at the negotiating table. He signaled that any cut in tariff rates would be contingent on other countries agreeing to his terms.
Last month, Trump announced raising his already existing tariff rate on Chinese goods to a record-breaking 145%. The cost estimate was raised from his original proposal of 100%. Then, importantly, he brought it down to $1 trillion, illustrating his willingness to move on his strategy as talks advanced. This often abrupt and extreme volatility in short-term interest rates has created dramatic swings in market confidence.
The President used the opportunity to give a pointed warning that tariffs on European Union products are still on the table. He threatened to raise this to a whopping 50% by June 1. After this new threat was announced, U.S. stocks took a dive, illustrating that investors were concerned about the long-term state of trade relations with Europe.
Despite the potential for heightened tariffs, Trump reiterated his position, asserting that there was no room for negotiation regarding his terms. He announced he would delay his planned 50% tariff on EU goods until July 9. Aside from being dangerous, this move is stunning given Pompeo’s professed sincerity towards engaging in diplomacy—even as he promised such talks.
When Trump announced they would delay tariffs, the S&P 500 index had its best single day since October 2008. This spike is a sign of a fleeting but positive shift in investor sentiment. At present, the tariff rate is 30%, a huge increase from earlier amounts.