U.S. President Donald Trump and his advisers claim this has been the plan all along: announce extremely high tariffs, pressure countries to come to the negotiating table, and—except for China—pull back afterward to reach new trade agreements. However, the 90-day pause the American leader has given his “reciprocal” tariffs only gives the administration three months to secure highly complex trade deals with dozens of countries, CNN reports.
Financial markets aren’t convinced. Stocks have swung wildly as uncertainty has grown significantly. Other markets are sending a clear message of deep skepticism that Trump will be able to carry out this plan. As of Friday: after a steep drop in stocks on Thursday, markets appeared calmer—for the moment—and showed considerable gains on Friday. The Dow Jones ended the day up 619 points, or 1.56 percent. The S&P 500 rose by 1.81 percent, while the Nasdaq increased by 2.06 percent. Still, warning signals kept coming from other markets, including oil, bonds, and the dollar. Investors are trading in an environment of extreme uncertainty, where any statement from Trump can spark either a strong rally or an immediate market drop.
The Trump administration expresses optimism, saying that dozens of countries have shown interest in reaching a deal. Nevertheless, it is providing few details about the ongoing negotiations, though it has stated that allies like South Korea and Japan will be prioritized. But trade agreements are extremely complex processes that are usually negotiated over years—not months.
Even if Trump manages to reach deals with all those countries in such a short time, China—the world’s largest exporter—remains the “elephant in the room.” Beijing is locked in a retaliatory battle with Washington, with Trump not only excluding China from the tariff pause but also raising tariffs on Chinese goods by at least 145 percent. In his first public comments on the escalating trade war, Chinese leader Xi Jinping stated that he “is not afraid,” and has increased tariffs on American goods by 125 percent.
