This past week was one of the most chaotic ones in history, in terms of the economy and stock market.
Stocks plunged, rallied, and plunged again, as the Trump Administration put historical tariffs in place, and then reversed themselves on most of them, announcing a “90-day pause” on most tariffs on countries besides China.
And if you think things are going to calm down, now that the week is over, you probably don’t know Donald Trump.
The tariffs on China, of course, are still in place, with China announcing its own retaliatory tariffs. Some reports on Friday stated that the White House was optimistic that China “wants a deal,” which sent the markets, once again, upward.
But that is far from a done deal. And unless there is a quick deal, Americans are going to start to notice that things, especially the many goods that are shipped from China, are getting a lot more expensive.
Consumer Confidence Slides Thanks to Donald Trump and Tariffs
There was an indication of a cataclysmic turn for consumer sentiment on Friday, with the release of a very negative consumer confidence report from the University of Michigan.
Based on data taken before the announcement of the tariff reversal, the Michigan survey found that the Index of Consumer Sentiment dropped 10.9 percent month over month and 34.2 percent year over year. Also, the Current Economic Conditions index was down 11.4 percent month over month and 28.5 percent year over year, while the Index of Consumer Expectations dropped 10.3 percent month over month and 37.9 year over year.
Sentiment also dropped for the fourth straight month, and had lost more than 30 percent since December, “amid growing worries about trade war developments that have oscillated over the course of the year.”
The decline in confidence, the University of Michigan’s Surveys of Consumers Director Joanne Hsu said in the release, was “pervasive and unanimous across age, income, education, geographic region, and political affiliation.”
Economic Disaster Still Lurks
According to an analysis published in Barrons on Friday by Matt Peterson, Wall Street came close to a “disaster” this week- and the threat is far from over.
And the problem is with the bond market.
“The bond market’s reaction to the tariffs has alarmed investors and sparked fears of an incipient financial crisis as the tariffs went into effect,” Paterson wrote. “The immediate crisis may have eased, but with long-term Treasury yields still elevated, the problems that forced the administration to alter its plans on Wednesday could easily recur if the White House keeps moving forward with tariffs.”
Could There Be a Deal Between Trump and China on Tariffs?
There was enough noise Friday about a potential deal between the U.S. and China that it moved the markets upwards. But the reality is a bit more uncertain than that, following days of the two nations raising tariffs on each other.
Per CNN, there was some communication between the White House and China, in which the Chinese were warned against retaliating. They were also told that Chinese President Xi Jinping “should request a call” with Trump, as they had been insisting for a number of months.
The CNN report made it clear that there is diplomacy going on between the two powers. But the U.S. has balked at efforts to set up a back channel with China. So not only have Trump and Xi not yet had a call, but they can’t even seem to agree on how exactly they would go about setting up such a call.
“The Chinese in any case, are reluctant to put their leader in the position that Zelensky found himself in,” Danny Russel, a former assistant secretary of State for East Asia and now the vice president of the Asian Society Policy Institute, told CNN. “They want to ensure that some of the groundwork is laid for a meeting, and that there’s some ground rules established.”
Therefore, it doesn’t appear that a deal to avert potential disaster is going to happen anytime soon.
About the Author: Stephen Silver
Stephen Silver is an award-winning journalist, essayist and film critic, and contributor to the Philadelphia Inquirer, the Jewish Telegraphic Agency, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. For over a decade, Stephen has authored thousands of articles that focus on politics, technology, and the economy. Follow him on X (formerly Twitter) at @StephenSilver, and subscribe to his Substack newsletter
