WASHINGTON: President Donald Trump's sweeping tariff plans battered global markets again on Monday after he said foreign governments would have to pay "a lot of money" to get the levies removed, while US stocks got a brief lift on hints of a pause, only to slide again.
Asian and European shares plunged and oil prices plummeted as investors feared the duties Trump likened to "medicine to fix something" at the weekend could lead to higher prices, weaker demand and potentially a global recession.
US stocks initially tumbled as well, then rebounded after White House adviser Kevin Hassett said according to CNBC that Trump was considering a 90-day pause in tariffs for all countries except China. Stocks then slid again after the broadcaster cited the White House as saying the pause comment was "fake news".
The European Union, which has been divided on how strongly to punch back against Washington without risking more pain for its own companies and consumers, said it wanted to negotiate but was also ready to retaliate. Commission President Ursula von der Leyen said the EU had offered Trump "zero-for-zero" tariffs on industrial goods. Goldman Sachs raised the odds of a US recession to 45 per cent in the next 12 months, joining other investment banks in revising their forecast. JPMorgan economists now estimate the tariffs pushing the US economy into a 0.3 per cent contraction, down from an earlier estimate of 1.3 per cent growth of gross domestic product.
"People are afraid the worst is yet to come. They're worried about a market crash," said Robert Pavlik, senior portfolio manager at Dakota Wealth Management in Connecticut.
"They're worried about what follows — a recession here domestically and then globally, leading to a possible depression."
Trump had shown no sign of relaxing his tariff policy earlier on Monday, blasting China for hitting back with retaliatory tariffs and repeating a call for the US Federal Reserve to cut interest rates.
"The United States has a chance to do something that should have been done DECADES AGO. Don’t be Weak! Don’t be Stupid!" he wrote on social media.
Speaking to reporters earlier aboard Air Force One on Sunday, he also brushed off the losses that have wiped out trillions of dollars from world stock markets.
"I don't want anything to go down. But sometimes you have to take medicine to fix something," he said as he returned from a weekend of golf in Florida.
As Trump's circle hit back at critics, White House trade adviser Peter Navarro said talk of a recession was "silly".
Hassett, director of the National Economic Council, said separately that Trump had talked to world leaders all weekend and would listen to proposals for great deals.
"He's doubling down on something that he knows works, and he's going to continue to do that," he said on Fox News. "But he is also going to listen to our trading partners, and if they come to us with really great deals that advantage American manufacturing and American farmers, I'm sure he'll listen." - Reuters
Oman Observer is now on the WhatsApp channel. Click here
