While President Trump is impressed with the U.S. stock market’s growth since his election, he conceded Friday it would be performing even better if international trade negotiations were resolved.
The major U.S. indexes have languished since the White House’s announcement of stiff metals tariffs in March, followed by duties on $50 billion of Chinese imports and threats of levies on $100 billion more after China retaliated. The blue-chip Dow Jones Industrial average is now 8.8 percent below its January record of 26,616.
Investors are “waiting to see what’s going to happen on trade,” Trump told reporters outside the White House. “We’re going to be announcing some incredible trade deals.”
Economists and analysts have expressed repeated concerns, however, that Trump’s protectionist policies might instead spark an international trade war that undermines the economic benefits of a GOP-led tax cut trimming the top corporate rate to 21 percent from 35 percent. The president has responded that some short-term pain may be required as the U.S. revises decades’ worth of trade policies that he says have undermined U.S. business.
In particular, Trump has cited a U.S. trade deficit that grew to $568.4 billion last year, driven largely by China. Still, the president says he has great respect for premier Xi Jinping.
“That’s why we’re being so nice,” he said. “But we have to bring fairness to trade between the U.S. and China, and we will.”
The Dow Jones index climbed 1.4 percent as Trump’s trade comments combined with expansion in the job market. U.S. payrolls added 164,000 positions in April, the Department of Labor reported Friday morning, and the unemployment rate dropped to 3.9 percent. The S&P 500 subsequently rose 1.3 percent, and the tech-heavy Nasdaq added 1.7 percent.
China’s government, which met this week with a U.S. delegation including Treasury Secretary Steve Mnuchin and trade chief Robert Lighthizer, said Friday that “considerable differences” remain between the two parties, though progress was made.
Should China and the U.S. prove unable to resolve those points of contention, Chinese shoppers who use e-commerce platforms like Alibaba, a $488 billion firm based in Hangzhou, would find other importers, said Joseph Tsai, the company’s vice chairman.
“Obviously, a trade war is not good for anybody,” Tsai told investors on an earnings call. It might prove particularly harmful to small U.S. businesses that sell products via Alibaba, he noted, but “there will always be alternative channels for us to bring in imported products for Chinese consumers.”
