US stocks sank Thursday, returning some of the great profits following President Donald Trump’s decision to temporarily lower his drastic tariffs in dozens of countries as investors assessed the situation in his world trade war.
Trump’s sudden decision on Wednesday to freeze most of his large new obligations for 90 days has brought relief to abused markets and uneasy global leaders, even ratcheting a trade war with China.
However, his flagellated approach still has companies worried about potential fallouts and scramblings to prepare what will happen in three months.
The S&P 500 index fell 5.2% on Thursday afternoon, Nasdaq fell 6.1% and Dow Jones Industry Aperation fell 4.5%.
Speaking at the cabinet meeting, Trump repeated that the “transition difficulty” would continue for the next few days.
His sudden decision to freeze most of his large new obligations for 90 days has brought relief to abused markets and unsettling world leaders, even ratcheting a trade war with China.
In Europe, bond yields for the eurozone government have bounced up and spread has been strengthened, and markets have bet on European Central Bank interest rate cuts after Trump’s latest announcement. European stocks have skyrocketed.
The European Union said it plans to hold back retaliatory tariffs for 90 days. This was scheduled to launch anti-crimes for around 21 billion euros ($232.5 billion) of US imports next Tuesday, in response to a 25% tariff on steel and aluminum. It still evaluates how it handles US car duties and the wider 10% taxation remaining on the spot.
“I want to give a chance to negotiate,” said Ursula von der Reyen of the European Commission in X.
However, she warned that if negotiations are “unsatisfied,” the counterattack could be revived.
The Southeast Asian government has also pledged to not impose retaliatory measures in response to Trump’s tariffs.
Following a video conference between members of the Association of Southeast Asian Countries (ASEAN) on Thursday, the economy minister for the 10th country block said in a statement:
The Trump administration is approaching agreements with several countries, White House economic adviser Kevin Hassett told reporters.
“The USTR (US Trade Officer) has made an explicit offer of what we are learning, and has now made a decision, considering whether it is sufficient to present a president and informing us that there are currently 15 countries that we are deciding,” Hassett added, referring to the US trade representative.
But Trump hasn’t announced yet, as he tells reporters that it can’t be “easy” to agree.
When asked what would happen if the country was not reached before the 90-day suspension expired, Trump said he would return to the country’s tariff charges to the original announced tariff charges.
“Well, that’s what happens. I mean, we can’t do the deal we want to do, or we have to do, or that’s good for both parties – that’s good for both parties – it’s going to go back to where we were,” he said.
But he added, “See what happens then.”
US-China Trade War Ratchet Up
Despite the US president suspending most of the so-called “mutual” tariffs, he has stepped up pressure on China, China’s second-largest economy and the second-largest largest provider of US imports.
The White House told CNBC Thursday that the move would bring the overall level of new tariffs Trump has imposed on China at 145% if it considers the 20% tariffs Trump has imposed on China earlier this year, citing fentanyl concerns.
If the US continues, China will continue until the end, his Yong Kian province spokesman said. China’s doors were open to dialogue, but this must be based on mutual respect, the ministry said.
However, at a cabinet meeting on Thursday, the trade war with China led Trump to say Washington “want to work” with Beijing again.
He emphasized that he has a good personal connection with Chinese President Xi Jinping.
“In the truest sense, he has been my friend for a long time, and I think we’ll do something very good for both countries,” Trump said.
The Chinese Yuan reached its lowest level against the dollar on Thursday since the global financial crisis.
More than 3% also retreated on Thursday as they deepened the US-China trade war and feared the possibility of a recession created by the announcement of a Trump suspension.
A report from New York said that Al Jazeera’s Kristen Salumey was among the US companies most exposed to the US-China trade war.
“Of course, iPhone manufacturers produce a lot of products in China,” she said.
“If it’s 145%, there’s no trade between the US and China,” Deborah Elms, director of trade policy at Singapore’s Hinrich Foundation, told Al Jazeera.
“It will cause serious headaches for many people, including businesses based in both locations,” she warned.
In a report from Washington, D.C., Al Jazeera’s Mike Hanna said it is not clear whether the US-China trade war will continue to escalate.
“Trump continues to say he wants to create a positive negotiation environment. But at what point will he stop ratchet from the 145% tariffs imposed on China? This requires some kind of endgame,” he pointed out.
“The cabinet members don’t seem to be asking these questions publicly, at least,” he said.