Donald Trump has admitted the United States will face “transition costs” as a result of his global tariffs, while threatening to reimpose the full rate of his “reciprocal” levies if countries fail to strike a deal with him within 90 days.
London’s FTSE 100 closed 3 per cent higher as it rebounded somewhat alongside other European markets in Thursday’s trading, but Wall Street’s pain continued despite Mr Trump announcing the three-month pause in which most of his so-called “reciprocal” tariffs will remain at a blanket 10 per cent.
Although his threats continued on Thursday, the US president also signalled that he could be open to extending the pause, telling reporters: “We’ll have to see what happens at that time.”
But in what may be a blow to Sir Keir Starmer, Mr Trump’s trade adviser Kevin Hassett warned that the lower rate was likely to remain for most of Washington’s trading partners, telling CNBC: “It is going to take some kind of extraordinary deal for the president to go below [that].”
Mr Trump escalated his trade war with China further on Thursday, imposing tariffs of 145 per cent, while the European Union put its retaliatory measures on hold for 90 days to “give negotiations a chance”.
Trump’s tariff pause does little to lower overall tariff rates, Yale researchers say
Donald Trump’s climbdown yesterday has done little to lower the average import duty rate from the elevated levels to which his wave of tariffs had driven them, according to researchers from Yale University.
“Consumers face an overall average effective tariff rate of 25.3 per cent, the highest since 1909,” the Yale Budget Lab wrote.
“This is only slightly different from where the effective rate was before the late-April 9 announcement. Even after consumption shifts, the average tariff rate will be 18.1 per cent, the highest since 1934.”
Watch: Trump brags to racing drivers that his friend made $2bn from stock market chaos
Markets ‘don’t know what the end game is’ with Trump tariffs, says analyst
The stock markets “don’t know what the end game is” with Donald Trump’s tariffs, an analyst has warned, as Wall Street closed with all three major indexes down in today’s trading despite the US president’s climbdown on Wednesday.
“Investors are still uncomfortable with it, because they don’t know what the end game is,” Paul Nolte, a senior wealth advisor at Illinois-based firm Murphy & Sylvest, told Reuters. “”I think what we’re seeing, still, is investor concern about tariffs and that is pretty much front and center for everything.”
“It’s hard for investors to feel comfortable about buying stocks with volatility so high,” Mr Nolte added.
Wall Street closes sharply lower as tariff risks send investors fleeing
All three major US stock indexes once again suffered steep losses today, forfeiting much of the previous session’s gains as growing concerns over the escalating Washington-Beijing trade face-off dampened optimism over upbeat economic data and US-Europe trade negotiations.
According to preliminary data, the S&P 500 closed 3.45 per cent lower, while the Nasdaq Composite was down 4.31 per cent, and the Dow Jones Industrial Average was 2.54 per cent lower at the close of trading today.
Big Tech came under pressure once again, with each of the so-called Magnificent Seven group of artificial intelligence-related momentum ending with steep losses.
Analysis | Trump’s first cabinet meeting after tariffs climbdown might as well have been held in Moscow
The Independent’s senior US correspondent Richard Hall writes:
Donald Trump has made no secret of his affinity for Russian president Vladimir Putin’s leadership style, and he got to experience it first-hand Thursday in a cabinet meeting that has been described as “Kremlin-esque.”
Just a day after President Trump backtracked on a disastrous tariff policy that sent global markets into turmoil, cabinet members lined up to massage the president’s ego with sycophantic language that would make North Korean newsreaders blush. Trump sat stony-faced through each tribute, occasionally offering commentary when they were done.
After Trump’s cabinet had finished giving their updates, Trump spoke at length in response to questions from a White House pool that had been carefully selected and bolstered by friendly outlets, as it is in Moscow.
He described the rebound from his self-induced downturn as “the biggest day in history” and warned there would be “transition difficulty.”
The president appeared eager to move on from his attempt to impose tighter government control over the economy, and with it isolation from the global market, perhaps looking forward to a giant military parade that is rumoured to be in the works for this summer – all to celebrate his birthday. Sound familiar?
Dollar hits 10-year low against Swiss franc as markets digest trade war drama
The US dollar has hit a 10-year low against the safe-haven Swiss franc, as markets digested Donald Trump’s dramatic reversal on tariffs.
The greenback rebounded against the Swiss franc and Japanese yen on Wednesday, while Wall Street’s main stock indexes leaped as Mr Trump’s tariff climbdown brought some relief to investors.
But traders were readjusting their positions today, with the dollar dropping 2 per cent to 144.795 yen and 3.6 per cent versus the Swiss franc to 0.82635.
The dollar has fallen 3.46 per cent against the yen and nearly 6.5 per cent against the Swiss franc so far this month. It is on track for the biggest one-day loss against the franc since January 2015.
Trump-Truss comparisons are fair, says her ex-chancellor
Kwasi Kwarteng, who was chancellor under Liz Truss’s short-lived premiership, says comparisons between Donald Trump’s tariffs and her actions are fair.
Asked about comparisons on Sky News, he said: “I think they are fair.
“I think he’s gone full maximus in the way that we did, and what he’s trying to do is essentially reshape the world order, and he has taken the view… to just do everything at once, to create maximum disruption.
“And now he’s rowed back.”
He said, as in his experience under Truss, the bond markets “are the key”.
“That’s what’s going to be pushing up mortgage rates for his base,” he says.
“I think the yields were critical, because I don’t think he minds about the stock markets in the way that he would about the bond market.”
Mr Kwarteng said a “full-scale” trade war between the US and China would have an adverse effect on the global economy, adding it would “drag Europe down, and possibly us as well”.
Watch: Trump says he hasn’t seen today’s stock market slump
US and Vietnam to begin formal talks on trade, Washington says
The United States and Vietnam have agreed to begin formal discussions on reciprocal trade, Donald Trump’s Treasury secretary Scott Bessent has said, following a meeting with the Vietnamese deputy prime minister Duc Phoc.
In a statement, the US Treasury said: “During their talks, Secretary Bessent emphasised the importance of continued engagement with trade partners, and the need for quick, demonstrable progress to resolve outstanding issues.”
Vietnam was initially hit with a huge 46 per cent tariff on exports to the US – its largest export market – as part of Mr Trump’s so-called “Liberation Day” announcement, before the US president relented yesterday to reduce the levy to 10 per cent for 90 days.
Trump claims he could make ‘every deal in a day if I wanted’
Donald Trump has claimed that he could make “every deal in one day if I wanted to” – and warned that his higher “reciprocal” tariffs rate could return once the 90-day period ends.
Speaking to reporters following a cabinet meeting, the US president said: “We have to have a deal that we like. We don’t want a deal that’s going to be a bad deal. I could make every deal in one day if I wanted to. I could do this all in one day – I could say: ‘here’s what we’ll do’.”
Asked if the higher tariffs will revert if deals cannot be reached in 90 days, Mr Trump said: “That’s what will happen. If we can’t make the deal that we want to make or have to make, or that’s good for both parties – it’s got to be good for both parties – and then we go back to where we were.”
Pressed on whether he would extend the pause, he replied: “We’ll have to see what happens at that time.”