U.S. markets opened dramatically lower as investor mood fluctuated with President Donald Trump’s shifting tariff plan. The stock market suffered through five straight down days. Notably, it captures a growing fear that the policies are going to do long-term harm to our entire economy. Many analysts noted that Trump’s recent moves have created confusion regarding the future of trade negotiations and their implications for key trading partners.
President Trump is perceived to have created “maximum negotiating leverage for himself” as he navigates the complex landscape of international trade. His administration has made tariffs a priority, especially when it comes to China. This singular focus comes with significant questions as to the lasting impacts on our economy and our standing in the world.
Indeed, in a recent Truth Social post, Trump claimed 75 countries have already started trade talks. He pointed out this has all happened without any major backlash on U.S. tariffs. There’s still some anxiety over how he will approach the rest of his tariff agenda. The administration has yet to explain whether the current baseline 10% tariffs on most of these countries will be maintained. This uncertainty has blinded investors and businesses left waiting on the sidelines, eager for clarity.
Delta Air Lines CEO Ed Bastian was the administration’s worst nightmare, airing his frustration at the administration’s blunt and abrasive approach. He said lack of long-term strategic direction is hampering reasonable, rational planning for businesses such as Delta. This uncertainty exists even with their early estimates predicting record profits heading into 2025. Yet economic uncertainty has forced the airline to adjust its outlook lower.
“Trying to do it all at the same time has created chaos in terms of being able to make plans,” – Ed Bastian, CEO of Delta Air Lines
Beyond that, analysts are split on if and when substantive trade negotiations with our major trading partners will become a reality. John Canavan, lead analyst at Oxford Economics, noted that “there have been very mixed messages on whether there would be negotiations,” adding to the confusion felt in financial markets.
The possible repercussions of Trump’s tariffs go much deeper than new trade agreements. Business executives have started to ring alarm bells about the danger of a recession caused by these policies. RSM chief economist Joe Brusuelas cautioned two weeks ago that the economy could be in recession by this quarter. He warned that a double whammy shock to consumer sentiment and corporate confidence could bring about this recession.
“Simultaneous shocks to consumer sentiment, corporate confidence, trade, financial markets as well as to prices, new orders and the labour market will tip the economy into recession in the current quarter,” – Joe Brusuelas, chief economist at RSM
With U.S. trading partners retaliating with their own import taxes, the gamble has gotten even more serious. Each of these countries have already retaliated, further worsening the U.S.’s negotiating position and moving all countries closer to a feared, tit-for-tat trade war.
As Treasury Secretary Scott Bessent pointed out, negotiating these tariff rates could be a process of months, deepening the uncertainty in an already uncertain market. He stated that without a de-escalation of trade tensions, it would be very difficult for markets to see stability.
“Absent any de-escalation, it’s going to be difficult for markets to stabilise.” – Market analyst
In spite of the challenges ahead, some local officials are surprisingly hopeful about the future direction of the economy. As a woman, entrepreneur and business leader, Bessent, 56, is upbeat about the economic times ahead. He’s confident it will soon “be back to firing on all cylinders,” a testament to hope in the face of current despair.
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