U.S. markets plunged again Thursday amid doubts the Trump administration and China can strike a legitimate trade deal that would avoid an escalation of tensions and economic turbulence as the White House urges patience — and few guarantees of success.
The Dow Jones Industrial Average, NASDAQ and S&P 500 Index all were closed Wednesday as part of a national day of mourning for the late President George H.W. Bush following a Tuesday sell off. But the one-day break did little to calm spooked markets.
All three major U.S. markets had lost almost 2 percent of their respective values around 10 a.m., with the Dow down 464 points.
The ongoing slide was triggered in large part by President Donald Trump’s repeated warnings Tuesday that he is a “Tariff Man,” and would institute even tougher penalties on Chinese goods if the two economic powers cannot reach a deal in the next three months.
....I am a Tariff Man. When people or countries come in to raid the great wealth of our Nation, I want them to pay for the privilege of doing so. It will always be the best way to max out our economic power. We are right now taking in $billions in Tariffs. MAKE AMERICA RICH AGAIN— Donald J. Trump (@realDonaldTrump) December 4, 2018
For instance, on Tuesday night, the president threatened “major Tariffs” on Chinese products shipped to the United States if his administration fails to strike a final trade pact with Beijing.
He and Chinese President Xi Jinping, during a Saturday night dinner in Argentina following a G-20 summit, agreed to a trade truce and a 90-day effort to come to terms. As part of that agreement, China said it would buy more U.S. agricultural goods and Trump agreed he will not hike 10 percent tariffs to 25 percent as planned on Jan. 1 while the countries continue negotiations.
Democratic lawmakers, like Connecticut’s Christopher S. Murphy, are not buying the U.S. president’s claim the trade truce amounts to a “big win.”
But Senate Republican Policy Committee Chairman John Barrasso of Wyoming said Trump has proven to be a “successful trader,” adding in a television interview Sunday: “Everything the president has promised he's delivered on and these are going to be helpful to the economy and people at home.”
Appearing mindful of Tuesday’s market drop, Trump on Wednesday tried a little Twitter therapy. Just hours after the “major tariffs” threat toward Beijing, the U.S. chief executive claimed his administration is hearing “very strong signals being sent by China.”
But among his top trade advisers, they essentially are pleading with markets to give them time to determine whether Chinese officials are serious and then possibly workout what will be a difficult deal to strike.
“I think personal relationships matter and we'll see how this turns out,” Lawrence Kudlow, director of the White House’s National Economic Council, told reporters Tuesday. “But I will warn you I am cautiously optimistic about this.”
Kudlow stressed on a conference call that Chinese trade officials used a new word during the Trump-Xi dinner and in follow-on talks: “immediately.” They promised to speedily drop what he described as “tariffs and non-tariff barriers and other structural issues.” But does the Trump administration believe the Chinese, who have for years promised changes without delivering?
“I can tell you I've never heard that ‘immediately’ commitment before,” he said. “Now, you asked me what that means specifically. All I can say is, ‘We’ll see.’”
Peter Navarro, director of the White House National Trade Council, was more blunt in a television interview Tuesday about the administration’s stance on nervous markets plummeting.
“I think what the markets have to do is give this process the requisite time,” he told Bloomberg Television. “I mean, it’s silly for the markets to react to some kind of rumors in the air.”
Watch: Bush 41, Awkward Moments and Tumultuous Tariffs: Today in Washington