Stocks fall after day of wild swings as markets digest Trump’s tariff reality

Trump has sought to upend an entire economic order that revolves around free trade and the U.S. transition to a service-oriented economy from a manufacturing-intensive one. 

Baseline 10% tariffs took effect Saturday, with dozens of countries facing higher so-called reciprocal tariffs beginning Wednesday. China said Friday it would impose a 34% tariff on all goods imported from the United States beginning this Thursday, after the U.S. tariffs are set to rise on Chinese goods — from 20% to at least 54%.

Trump didn’t seem to be letting up anytime soon; on Monday he threatened China with an additional 50% tariffs by Wednesday if it didn’t rescind its retaliatory measures. The White House later clarified it would mean 104% total.

Trump said both that the tariffs may be permanent but that they also may be subject to negotiations — further sowing confusion about his plans.

“We’re going to get fair deals and good deals with everybody,” Trump said from the Oval Office, where he was meeting with Israeli Prime Minister Benjamin Netanyahu. “And if we don’t, we’re going to have nothing to do with them. They’re not going to be allowed to participate in the United States.”

And he continued to say the United States needed to close trade deficits — when countries’ imports exceed their exports — which economists say would mean a massive and potentially impossible reorientation of the U.S. economy.

Trump has tried to portray his strategy as winning. “Virtually every country wants to negotiate,” he said Monday.

He said he’d spoken with Japan’s prime minister, who was sending a team to negotiate. He said on Truth Social that “they have treated the U.S. very poorly on Trade. They don’t take our cars, but we take MILLIONS of theirs. Likewise Agriculture, and many other ‘things.’ It all has to change, but especially with CHINA!!!”

Yet the overwhelming consensus among economists and high-profile business executives has been that the tariffs are a huge mistake. Goldman Sachs analysts likened them to “Pandora’s box,” adding that the U.S. action against China in particular was “substantially higher” than what most investors had expected.  

And criticism from within Trump’s orbit — rare these days — is growing. Sens. Ted Cruz, R-Texas, and Rand Paul, R-Ky., have both publicly argued against the tariffs.

“One person can make a mistake, and guess what — tariffs are a terrible mistake,” Paul said last week.

Even Elon Musk chastised White House top trade adviser Peter Navarro for defending the tariffs. Musk, the Tesla CEO and the world’s richest man, shared a video Monday of economist Milton Friedman speaking about the benefits of importing goods and of free trade.