Goldman’s senior political economist, Alec Phillips, claims that despite all the indications of de-escalation, markets are not taking the president’s two warnings this week that the United States would raise tariffs on some of its major trade partners seriously.
In the Oval Office on Thursday, President Donald Trump declared, “There’ll be a time…where we’re just going to make the deal,” following the announcement of the trade agreement with the United Kingdom. “We already have the country’s involvement, so we don’t need it again. And we’ll state that this specific nation will pay a 25% tariff, 30%, 50%, 10%, or any other amount that may be required.”
According to Phillips, this implies that some, if not the majority, of trading partners will soon be threatened with the imposition of country-specific reciprocal tariff rates, which might be applied “on at least a few trading partners.”
China, Canada, Mexico, Germany, Japan, South Korea, Ireland, Italy, and Switzerland are among the countries with whom the United States has significant goods trade deficits.
Following two days of increases, U.S. stock futures (ES00) stopped on Friday. Since its intraday lows in early April, the S&P 500 SPX has increased by 17%.
