President Donald Trump has suggested that he could provide some exemptions to the 10% tariff placed on the majority of America's trading partners, although he emphasized that the rate is "pretty close" to being a floor for nations that want to negotiate trade deals.
"There could be a couple of exceptions for obvious reasons, but I would say 10% is a floor," Trump said on board Air Force One Friday en route to Florida. He did not explain what the "obvious reasons" are and provided no suggestion that his tariff policies were facing a major shift.
Trump's comments follow a tumultuous week for financial markets, which are growing more uncertain as a result of his trade policies. The president had imposed large tariffs on a number of countries, only to postpone them hours later after market upheaval raised fears that Trump's trade actions would devastate the global economy.
As China, the world's second-largest economy, is slapped with a 145% tariff, Trump has kept a 10% rate for all other nations as governments around the world scramble to negotiate with the U.S. markets staged some improvement on Friday, with the S&P 500 rising 1.8% after reports that a Federal Reserve official said the central bank was willing to step in if needed to calm markets. U.S. 10-year bond yields also saw their biggest weekly rise in over 20 years.
In spite of the recent market volatility, Trump minimized the uncertainty, stating, "I think the markets were solid today. I think people are seeing we're in great shape." He also reiterated his faith in the U.S. dollar, asserting that it would "always" be the "currency of choice." He further stated, "If a nation said we're not going to be on the dollar, I would tell you that within about one phone call they would be back on the dollar."
Trump also brushed aside fears about U.S. Treasuries, which had lent momentum to his change in tariff stance. "The bond market's going good. It had a little moment but I solved that problem very quickly," he said.
Still, despite temporary relief for some trading partners, the elevated tariff on China will push U.S. tariff rates to record highs, Bloomberg Economics says. The ongoing U.S.-China trade war, involving the two largest economies in the world, is threatening $690 billion worth of trade.
Following U.S. tariff increases, China retaliated by raising its tariffs on all U.S. products to 125%, keeping pace with the U.S. action against Chinese imports, which now are subject to a combined 145% duty. Although China announced that it would not replicate further U.S. tariff increases, it reaffirmed its pledge to continue retaliating with unidentified countermeasures.
When questioned about the current trade war with China, Trump was optimistic, saying, "I think something positive is going to come." Trump complimented Chinese President Xi Jinping, referring to him as "a very good leader, a very smart leader."
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