President Donald Trump and Commerce Secretary Howard Lutnick gathered at the White House on March 3. Market fluctuations ensued on Friday as a response to President Trump’s recent remarks on tariffs. Stocks briefly rose after Trump suggested that there might be some flexibility in his plan to implement wide-ranging tariffs on most U.S. trading partners next month before dropping back down.
During an address in the Oval Office, Trump expressed his reluctance to consider exceptions to the broad “fair and reciprocal” duties he had previously announced in February, now set to take effect on April 2. However, he did mention the possibility of flexibility, emphasizing the importance of reciprocity.
Trump specifically mentioned China, stating that there could be room for discussions on trade matters, and he expressed a desire to meet with Chinese President Xi Jinping soon. Despite this slight concession, the Trump administration remains steadfast in its commitment to imposing extensive trade tariffs, which have impacted short-term U.S. economic growth prospects and placed strain on global GDP.
A White House spokesperson emphasized the administration’s dedication to leveling the playing field for American industries and workers, highlighting Trump’s trade agenda as a key element of delivering for the American people.
With stocks experiencing a significant decline, Trump and his administration have not refuted the possibility of economic challenges due to the tariff policies. When asked about the likelihood of a recession by Fox News host Maria Bartiromo, Trump declined to make any predictions.
The S&P 500 stock index was on track for its fifth consecutive week without gains, closing at levels last seen in September. Forecasts for GDP have been revised downwards by various entities, with the Organisation for Economic Co-operation and Development adjusting its U.S. GDP projections for 2025 and 2026. Global GDP forecasts have also been reduced due to increased trade barriers and geopolitical uncertainties impacting investments and consumer spending.
While the European Union postponed its retaliatory tariffs on U.S. goods to allow for further discussions with the U.S. administration, it emphasized that its response would remain robust. The EU is prepared for potential retaliation against U.S. measures, signaling a firm stance against trade disputes.
An E.U. spokesperson stated that Trump’s tariffs may lead to temporary price increases for consumers and businesses in the U.S. Federal Reserve Chair Jay Powell highlighted that inflation expectations have recently risen, with tariffs being cited as a key factor by both market and survey respondents. The constant back-and-forth on tariffs has increased overall economic uncertainty. Despite numerous threats, Trump has only imposed a 25% tariff on steel and aluminum globally and additional levies on China. He has also suspended duties on goods from Canada and Mexico while considering high duties on European imports. Trump hinted at significant trade changes scheduled for April 2, aiming to impose heavy trade duties on countries that have imposed the same on U.S. exports. Economist Gregory Daco warned of potential inflation risks due to tariffs, trade policy ambiguity, and stricter immigration rules. He noted a shift from optimism to pessimism in the economic narrative and highlighted concerns about stagflation risks with increasing inflation and unemployment rates.
