Trump's hints at ‘flexibility' on reciprocal tariffs cheers markets
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Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
A new week begins with some familiar worries, as global markets brace for the US to intensify its trade war next month.
US President Donald Trump has declared April 2 will be 'Liberation Day' for the US, when he will unveil so-called 'reciprocal tariffs' on other countries who he perceives to be giving the US a bad deal on trade.
This has the potential to significantly widen the scope of the tariffs which Trump has been imposing on allies and rivals alike since returning to the White House.
But, hopes are building that the scope of Liberation Day be narrower than has been feared.
Late last week, Trump hinted that he could take a flexible approach. Speaking the Oval Office, he said:
'I don't change. But the word flexibility is an important word. Sometimes it's flexibility. So there'll be flexibility, but basically it's reciprocal.'
That has created some ambiguity, which optimistic investors may cling to.
White House offficials have told Bloomberg that some nations or blocs will be spared these reciprocal tariffs, and that – currently – Trump is not planning to announce separate, sectoral-specific tariffs at the Liberation Day event.
This could also cheer markets today, where stocks have been hurt in recent weeks by the threat of trade conflict, and fears of a US recession.
Last week, Treasury Secretary Scott Bessent said Trump's reciprocal tariffs will focus on particular nations deemed most responsible for unfair commercial practices. He dubbed them the 'dirty 15', because these 15% of countries account for 'a huge amount of our trading volume.'
Those practices could include non-tariff barriers including domestic-content production rules, testing regulations, or value-added tax (VAT) on sales to consumers.
Kathleen Brooks, research director at XTB, say the latest news regarding reciprocal tariffs is 'mildly positive for risk sentiment' today.
She explains:
US and European equity futures are pointing to a stronger open as traders react to news that reciprocal tariffs will not be implemented all at once. The tariffs for April 2nd are now likely to be less sprawling and not a fully global event. They are also expected to exclude sector-specific tariffs on autos, pharma, and chip makers, which may spur some relief rallies later on Monday.
But is a delay to tariff announcements merely kicking the can down the road, rather than a softening in Trump's approach to tariffs? There have been comments from officials this weekend, which suggests that tariffs will not be as bad as some expect, and they will only target countries that run large trade surpluses with the US.
We'll also get the latest surveys of purchasing managers from across the US, the UK and the eurozone today, which may show the impact of tariff fears… The agenda 9am GMT: Flash Eurozone PMI report for March
9.30am GMT: UK PMI report for March
12.30pm: United States Chicago Fed National Activity Index
1.45pm GMT: US PMI report for March Share Show key events only Please turn on JavaScript to use this feature
Financial markets have made an optimistic start on Monday with U.S. stock futures rising and the dollar firm, Reuters reports.
S&P 500 futures are up about 0.7% in the Asia session and Nasdaq 100 futures have risen by 1%.
European futures were up 0.3% earlier today, with the UK's FTSE 100 index on track to rise 0.25%.
Samer Hasn, senior market analyst at XS.com, says:
US stock indexes are poised for a positive opening amid optimism about the possibility of de-escalating trade tensions between the United States and China and moving toward negotiations. This could reduce the risk of a broader trade war after the two economic powers' mutual escalation, which has caused uncertainty in the markets.
Republican Representative Steve Daines, a pro-Trump Republican, visited China and met with Premier Li Qiang on Sunday. This visit marks the first visit by a US political figure to China since Trump took office earlier this year. It also represents an important step that paves the way for the next meeting between the Chinese and US presidents, according to Daines. Share
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
A new week begins with some familiar worries, as global markets brace for the US to intensify its trade war next month.
US President Donald Trump has declared April 2 will be 'Liberation Day' for the US, when he will unveil so-called 'reciprocal tariffs' on other countries who he perceives to be giving the US a bad deal on trade.
This has the potential to significantly widen the scope of the tariffs which Trump has been imposing on allies and rivals alike since returning to the White House.
But, hopes are building that the scope of Liberation Day be narrower than has been feared.
Late last week, Trump hinted that he could take a flexible approach. Speaking the Oval Office, he said:
'I don't change. But the word flexibility is an important word. Sometimes it's flexibility. So there'll be flexibility, but basically it's reciprocal.'
That has created some ambiguity, which optimistic investors may cling to.
White House offficials have told Bloomberg that some nations or blocs will be spared these reciprocal tariffs, and that – currently – Trump is not planning to announce separate, sectoral-specific tariffs at the Liberation Day event.
This could also cheer markets today, where stocks have been hurt in recent weeks by the threat of trade conflict, and fears of a US recession.
Last week, Treasury Secretary Scott Bessent said Trump's reciprocal tariffs will focus on particular nations deemed most responsible for unfair commercial practices. He dubbed them the 'dirty 15', because these 15% of countries account for 'a huge amount of our trading volume.'
Those practices could include non-tariff barriers including domestic-content production rules, testing regulations, or value-added tax (VAT) on sales to consumers.
Kathleen Brooks, research director at XTB, say the latest news regarding reciprocal tariffs is 'mildly positive for risk sentiment' today.
She explains:
US and European equity futures are pointing to a stronger open as traders react to news that reciprocal tariffs will not be implemented all at once. The tariffs for April 2nd are now likely to be less sprawling and not a fully global event. They are also expected to exclude sector-specific tariffs on autos, pharma, and chip makers, which may spur some relief rallies later on Monday.
But is a delay to tariff announcements merely kicking the can down the road, rather than a softening in Trump's approach to tariffs? There have been comments from officials this weekend, which suggests that tariffs will not be as bad as some expect, and they will only target countries that run large trade surpluses with the US.
We'll also get the latest surveys of purchasing managers from across the US, the UK and the eurozone today, which may show the impact of tariff fears… The agenda 9am GMT: Flash Eurozone PMI report for March
9.30am GMT: UK PMI report for March
12.30pm: United States Chicago Fed National Activity Index
1.45pm GMT: US PMI report for March Share
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