President Donald Trump is plowing ahead with his aggressive new tariff regime, rattling markets and sending foreign governments scrambling for an escape route.
Businesses large and small are watching closely to parse whether any reprieve is possible ahead of Wednesday, when the full duties take effect. But so far, the president has given them little to pin their hopes on.
To get a sense of where things stand — economically, politically and diplomatically — we convened a roundtable of POLITICO reporters across the globe to walk us through it.
The discussion featured White House reporter Megan Messerly, Morning Money author Sam Sutton, senior UK trade reporter Graham Lanktree and Ottawa bureau chief Nick Taylor-Vaisey. I moderated it as POLITICO’s economics correspondent.
Amid plenty of uncertainty, one thing we all agreed on: The drama isn’t going away any time soon.
This conversation has been edited for length and clarity.
White House reporter, POLITICO
Senior reporter, UK Trade, POLITICO
We had a wild day in the markets today. The S&P 500 briefly entered bear market territory. There was a huge pop upward on a fake report that Trump was going to pause the tariffs for 90 days and then a plunge again when it became clear it wasn’t true.
Stocks ended up mostly flat on the day. What was your biggest takeaway from the day about how Wall Street is coping with the tariffs?
Sutton: It just goes to show you how much demand there is for both clarity and relief. The possibility of a reprieve from the so-called “reciprocal” tariffs caused markets to surge because it would have alleviated any possible damage from new import levies and given markets some visibility into Trump’s endgame.
Today’s losses weren’t as bad as many feared — the Nasdaq actually climbed a tich — but the teeter-totter effects suggest that we’re going to be in a highly volatile environment for the foreseeable future.
Yeah, even some of Trump’s closest allies in the business world are showing signs of jitters. Bill Ackman, a prominent hedge fund investor who has been enthusiastically pro-Trump, has criticized how the tariffs were calculated.
And Elon Musk was taking swipes at White House trade adviser Peter Navarro over the weekend on Twitter — err, X. Megan, are you seeing those cracks show up inside the administration?
Messerly: Absolutely. I mean, it’s no secret that for as much as this White House wants to telegraph that they are one big happy family (and, compared to the last Trump administration, they certainly are), there are two pretty clear camps within the administration.
There’s the pure protectionist crowd and there’s the group that’s been calling themselves the “fair trade” crowd. Up until this point, we’ve seen that protectionist camp — including trade adviser Peter Navarro and U.S. Trade Representative Jamieson Greer — win out, but we started to see some wins for the other camp today as the president shifted his rhetoric to talk a bit more about dealmaking.
While this is likely to come as a disappointment for true believers like Navarro, a lot of folks close to the White House had expected some dealmaking to happen — though the president has stressed that not every country will get a deal. (See: The tit for tat on trade with China.)
What’s the administration’s message right now? Are they definitely saying they want to negotiate?
Sutton: The president this afternoon said that tariffs could be permanent and that some might be subject to negotiation. It’s a good Rorschach test for any skittish investors.
Messerly: Just adding to Sam here — yes, with a very big caveat. President Trump today very clearly used the word “negotiate” in a spray in the Oval Office with Israel Prime Minister Benjamin Netanyahu. Side note: The White House had been adamantly pushing back about the word “negotiate” on Friday, and stressed that the tariffs were “not a negotiation.”
But Trump has at the same time been emphasizing that there still will be some “permanent tariffs.” So really the news here is that there will definitely be negotiations, but no read yet as to how many of the 50-plus countries have reached out will get deals, and how many will be stuck with permanent tariffs in some form.
Got it. So, who knows.
Nick, foreign governments are obviously trying to figure out the answer to this same question. In Canada, we’ve seen Prime Minister Mark Carney retaliate against the new U.S. auto tariffs. Carney has an election coming up in a few weeks. Canada’s economy is heavily under threat, but at the same time, Canada and Mexico are also the only countries left who have a free trade agreement that the U.S. is acknowledging.
How is Carney weighing all of this? What else do you expect to see from him in the coming days?
Taylor-Vaisey: Every day that Mark Carney gets to wear his “prime minister” hat is a win for him against his Conservative rival, Pierre Poilievre. The Conservatives’ top goal these days seems to be to rip Carney’s credibility to shreds by any means necessary. But most polls show voters give Carney, a two-time former central banker, a distinct advantage on who can best protect Canada in the face of Trump.
Today, with steep lumber tariffs in the news, Carney took time to meet with British Columbia Premier David Eby. Forestry is massive in B.C. — lots of jobs at stake. They talked about how to support workers. Boom, more headlines on how he’s standing up to Trump.
I expect Carney to carry the metaphorical PM hat wherever he goes for the three weeks remaining in this sprint of a campaign.
Graham, what about the United Kingdom? Is Prime Minister Keir Starmer still holding out hope for a free trade deal?
Lanktree: Ahead of Trump’s tariff announcement, Starmer’s government had negotiated the framework of an agreement that might yet see tariffs lifted on the U.K. But it’s still sitting on Trump’s Resolute desk.
It also become increasingly clear to the British public from our reporting that there are a number of concessions that would be part of the deal, like a review of a new Online Safety law and additional market access for U.S. beef. The U.K. may be able to strike a deal, but it could come at a politically costly price for the Starmer government.
By the way, this fundamental shift in the U.S.’s trade relationships kind of reminds me of Brexit. Do you see any parallels?
Lanktree: It resembles Brexit in that the U.S. has now raised barriers on nearly all countries globally instead of just 27 in the EU. Brexit has had long-term impacts on the U.K. economy, acting as a drag on GDP and foreign investment — driven by both uncertainty and new trade barriers. Similar impacts will now be felt around the world. So think of it as a world wide Brexit like the U.S. leaving the global economy.
A trade lawyer at a global law firm here in London told me their clients see Trump’s tariffs as “worse than Brexit” as they’re dealing with rapidly changing trade rules on a massive scale. It’s not just the tariffs that Trump has imposed, but the retaliation it will provoke.
Yeah, here in the U.S., it seems like this is going to keep getting harder from a messaging standpoint, particularly once we start seeing more of the real-world economic effects. Economists generally expect layoffs. Prices on a lot of stuff will go up.
So far, the administration’s message has been, short-term pain for long-term gain. Megan, do you expect a shift in policy or messaging once that pain starts to spread beyond financial markets?
Messerly: I think that’s the million-dollar question. Right now, all of this to the average American is just talk. Totally different ballgame when there are layoffs, price increases and other tangible impacts.
But I think it’s really to be determined what the White House’s response will be. None of this, really, has been predictable. We’re already seeing a shift in messaging today from — just grin and bear it, essentially, to now this new push about opening up negotiations, which seems very clearly aimed at — to some extent — also soothing the markets. But it becomes a political problem once people (cough, voters) start to feel it. And that’s going to make things a lot trickier for the White House, and Republicans more broadly, as they stare down the midterm elections.
Sutton: On that front, public polls have already started to swing against the president. He’s underwater on the economy, per Gallup and other pollsters. Households and businesses are increasingly bearish in their outlook on the labor market, inflation and business conditions. That doesn’t bode well for the GOP if the effects of this trade war become obvious in the coming months.
Yeah, Sam, I’m really hearing recession fears from every direction here. Corporate earnings season starts at the end of this week — we’ll find out how companies performed in the first quarter, but also their forecasts for profits.
How ugly is this going to be?
Sutton: Analysts have been scaling back expectations for a strong first quarter. But that doesn’t necessarily mean we’re going to see much bloodletting when companies start to report earnings later this week.
What I’ll be watching more closely is any forward guidance on what this will mean for future hiring, expansion plans, M&A and investment. There’s been plenty of what we call “soft data” on how those plans are being scaled back. It’s one thing to read it in a survey, it’s another to hear a CEO say “We were going to build this factory, but now we can’t because we have no idea what our input costs are going to look like.”
Yeah, I’d imagine that will be the biggest political test yet for the Trump administration.
Meanwhile, Nick or Graham, do you expect there to be any kind of coordinated effort between other governments in response to these Trump tariffs, if they go forward ahead as planned?
Will this motivate other countries to deepen ties with each other and move away from the U.S.?
Taylor-Vaisey: Canada has never had a needle like this to thread. A few weeks ago, Ottawa felt like public enemy number one in Trump’s White House. More recently, the president has been — well, pretty nice to Carney. And Canada escaped most of the wrath of Liberation Day. Carney’s team wants to act and sound tough enough to reassure Canadians, but not so tough that Trump notices — and not so prone to retaliatory tariffs that they make things worse for Canadian workers.
It’s a fact that Canada needs to diversify away from its dependence on American customers. Every party on the campaign trail agrees. Foreign Minister Mélanie Joly has talked about coordinating tariff responses with European and Asian allies. Their goal appears to be: Make more friends, don’t escalate with Trump, hope he inflicts pain elsewhere.
But Liberals also benefit from Trump as a noisy foil. So they likely don’t want the threat to disappear entirely.
Lanktree: When Mark Carney visited London at the end of last month, he said there was no coordinated plan to retaliate against Trump. While I’m not sure that’s true of Canada and the EU, the U.K. currently has no plans to retaliate. What I’ve heard from some businesses here in the U.K. is that they’re pushing the Starmer government to work with other members in the G6 to band together economically. There’s also been some movement among members within the Indo-Pacific CPTPP trade bloc — which counts Canada, the U.K., Japan and Mexico as members — to work together in some fashion to counter Trump through strengthening trade ties.
London and Ottawa have both said they would like to strengthen their trade ties amidst Trump’s brewing trade war. How they will do that isn’t exactly clear yet.
The CPTPP — now that sounds familiar! Ah, right, because the TPP was a trade deal originally led by the U.S. which never took effect — Trump rode to victory in 2016 partially on being anti-TPP. It would be ironic if its successor, which excludes the U.S., became a vehicle for pushing back against the U.S.
Lanktree: TPP was originally envisioned by the Obama administration to push back against China, which would be ironic indeed.
Taylor-Vaisey: Canada has for a couple of years sent volleys of ministers to Indo-Pacific countries in search of more trade links. They see the region as a natural partner for that kind of thing — but probably never anticipated this sort of motivation for cooperation.
OK, my next question is for all of you: What has surprised you the most about this tariff saga so far?
Messerly: Honestly — how little concern he has expressed publicly about the markets. It’s a complete 180 from how he read the markets during his first administration. And I think it reveals this bravado he has. It’s giving, “I alone can fix this.” Not to mention he doesn’t have a reelection to worry about (most likely…)
Taylor-Vaisey: Maybe I shouldn’t be surprised by this, but Trump’s rhetorical kid gloves on Carney amid the tariff and trade war gave us all whiplash. After they spoke for the first time, I was out with a Liberal candidate knocking on doors — and we agreed the prime minister couldn’t have written a better post if he’d tried.
Carney, a dry-witted banker who speaks low and slow, is the opposite in many ways of Justin Trudeau — so maybe the president just appreciates a different vibe. But Carney hasn’t gone easy on Trump. Like, not even one annexation threat? Wild.
“Not even one annexation threat” is such a striking reflection of where we’re at right now in U.S.-Canada relations.
Taylor-Vaisey: It’s early days…
Sutton: The scale. Obviously, this was the agenda that Trump campaigned on, so no one should have been surprised that he’d try to impose universal tariffs. But even during the campaign, I don’t think many fully appreciated the enormity of his trade agenda and how much pain it would unleash once enacted, at least in the short term. It’s easy to conceptualize what an earthquake can do, but it’s impossible to appreciate it until you see it.
Right, it seems like markets were getting socialized to a 10 percent or 20 percent tariff, but they expected that to be a ceiling, not a floor.
Lanktree: For me it’s been seeing some formerly free-market economists making the case that the tariffs, in this form, are the way to go to bring manufacturing back to the United States.
That and how the administration basically raised the price of consumer electronics for consumers by tariffing the entire supply chain of companies like Apple and Google that make the mobile phones that drive Silicon Valley’s social media products. Trump’s tariffs hit everywhere from China where [phones] are assembled — which Trump says he wouldn’t mind putting 100 percent tariffs on if they retaliate — to Vietnam, Taiwan where the chips are made, and India where Foxconn has new iPhone manufacturing plants.
Sutton: And, to Nick’s point, it’s early days.
Before we wrap up, does anyone have any bold predictions?
Taylor-Vaisey: Ovechkin may have beaten Gretzky’s goal-scoring record, but he’ll never catch up to his overall points. Just don’t cheer too loudly for Gretzky in some parts of Canada at this moment in time.
Lanktree: My bold prediction is that this is the new normal for however long Trump is president. Without this, I’m not sure they have a plan on how they’re going to bring manufacturing back to the U.S. or pay for the tax cuts they want.
Messerly: I don’t think this is bold at all, but even if we start to see negotiations with other countries, I’d expect Trump to continue to view China as its own ballgame.
Sutton: I think continued volatility may prompt some market participants to reassess their view of the dollar. The dollar sank with markets after the “Liberation Day” announcement —that’s highly unusual and spells trouble if uncertainty persists.
