It does not happen often that market-moving news emerges after we have finished writing The Tatton Weekly. Last week proved to be an exception. Having just commented on how politics and the prospect of fiscal easing by US and European governments had been taken positively by markets, Donald Trump released a Twitter tantrum which some have likened to him “livestreaming his own meltdown”.
The reason this specific tirade caused one of the largest and sharpest falls in the US stock market this year (the Dow Jones fell intraday by as much as 700 points, after markets had largely come to ignore his periodic outbursts), was because he announced further substantial tariff hikes against China.
This shocked markets for three reasons. Firstly, the imposition of tariffs is one of the few measures the US president can execute without the damage-limiting ‘checks and balances’ mechanism of US congress. Secondly, a previous Trump tweet of a postponement of the previous wave of tariff hikes had led to the impression that a trade deal might be forthcoming in the autumn. And third he referred to China’s leader Xi and the US central bank chairman Powell as “enemies” of America.
