Trade uncertainty continues to fill the air in markets

Trump’s tariffs are still the main thing that is keeping markets on edge as we get into June trading. Wall Street managed a modest recovery yesterday, led by tech shares. But even so, there’s still a lot of uncertainty up in the air on the trade front at the moment. Let’s try and take stock of what is happening as we look to the days ahead.

• The US federal court moved to temporarily reinstate reciprocal tariffs on Friday
• That follows from Trump’s appeal, so the ruling by the trade court is paused in the meantime
• However, the plaintiffs are ordered to respond by 5 June and the administration by 9 June
• Trump has now called for a longer pause amid ongoing trade negotiations
• And he has also warned countries to make their “best offers” by 4 June
• As much as Trump’s aides have talked about closing trade deals, we’re still yet to see any until now
• The supposed “easier” negotiations with Japan and India continue to run into roadblocks
• There is now just 36 days to go for trade deals to be struck
• And despite a “truce” period with China now, it doesn’t seem like talks are going anywhere
• US claims that Trump and Xi will “likely” speak this week but China remains silent on the matter

On that final point, go figure. When it comes to analysing Trump and the narrative he wants to sell, always remember that there are two sides to the coin.

It feels like we’re running in circles and maybe oblongs over the past 54 days since we began this 90-day negotiation period. The question now is, will Trump extend that as we get no closer to any trade deals? Or will he even have the power to do so as the courts are still doing battle on legitimising his tariffs? And what about China? As talks go nowhere, will Trump lose his patience and snap on China with higher tariffs?

Plenty of questions. Not much answers. That pretty much sums things up.

And in the case of the US dollar, that’s not a good sign of confidence for a currency that is already lacking in that department amid the ongoing policy incoherence and uncertainty.

This article was written by Justin Low at www.forexlive.com.