What Is Trump’s Tariff Endgame? Recession Fears Grow.

Worst offenders

Broad new tariffs on U.S. trading partners went into effect a few hours ago, including huge penalties for those on President Trump’s “worst offenders” list. Up next: the threat of additional levies on pharmaceutical imports.

The moves have hit jittery investors in the gut yet again, with bonds, Asian and European stocks and oil sharply lower on fears for the global economy.

Business leaders and policymakers are left to wonder: Is the president serious about cutting deals — or is the endgame to usher in a new protectionist era of global trade?

Trump continues to signal that more pain is ahead. “Sometimes you have to mix it up a little bit,” the president said on Tuesday, in remarks that framed his tariff policy as an eventual boon for American manufacturing and the economy, if also “somewhat explosive” for markets.

He also appears intent on ratcheting up his conflict with China, including a 104 percent tariff on Chinese imports. (China threatened an additional 50 percent duty on U.S. imports.) The tit-for-tat measures by Washington and Beijing are threatening collateral damage for global supply chains.

Speaking of explosive market developments …

• S&P 500 futures point to another volatile day. On Tuesday left the benchmark index a whisker away from a bear market. Assessing the sharp sell-off, JPMorgan Chase’s recession indicator spiked, as did the Cboe Volatility Index, known as Wall Street’s fear gauge. Just in: Delta Air Lines reported first-quarter results, saying “growth has largely stalled” on economic uncertainty, and declined to give a full-year outlook.

• Of increasing concern for many is the sharp sell-off in Treasury bonds and notes since Friday, which is bad news for American borrowers. “I haven’t seen moves or volatility of this size since the chaos of the pandemic in 2020,” Calvin Yeoh, a portfolio manager at the hedge fund Blue Edge Advisors, told Bloomberg. Keep an eye on Wednesday’s 10-year Treasury bond auction.

• Futures tied to West Texas Intermediate, the U.S. oil benchmark, have slipped below $56 as investors worry about a worldwide economic slowdown drying up demand. That’s well below the “all-in” break-even price for domestic producers, according to the research firm Rystad Energy, and could strain relations between Trump and some of his Big Oil backers. (So far, they’re staying quiet publicly.)

• China’s offshore yuan fell to a new low overnight, leading market watchers to question whether Beijing was intentionally devaluing its currency — something Trump has complained about — to lessen the hit from tariffs.

Trump and Treasury Secretary Scott Bessent say trade talks are happening, but the timeline is unclear. Japan and South Korea appear to be first up, but scores of other countries and regions, including China and the European Union, are in limbo.

DealBook has questions:

• If you’re looking to cut a deal with Trump, what is your next move? Given the falling markets, growing signs of a potential recession, anxiety among Republican lawmakers and donors, and increasingly public infighting among Trump’s inner circle, why not let the drama play out further before negotiating?

• If you’re a business, do you hold off on investments (including in new U.S. factories), hiring, and deal-making on the hopes that pressure will force the White House to change course?

But waiting could be a huge gamble, especially as Trump’s hawkish trade advisers like Peter Navarro and Steve Miran lay out ground rules for negotiating, which some commentators have likened to “a shake-down operation.”

A speech on Monday by Miran, the chair of the White House Council of Economic Advisers, at the nonpartisan Hudson Institute has drawn significant attention. Miran offered countries a five-point “burden sharing” plan to get in the administration’s good graces. One guideline read, “Simply write checks to Treasury.”

HERE’S WHAT’S HAPPENING

The Justice Department disbands its cryptocurrency enforcement unit. Todd Blanche, the deputy attorney general, said crypto investigations would focus more narrowly on crimes like fraud, drug trafficking and terrorism. The Trump administration has rolled back regulation of the crypto industry, which heavily backed President Trump’s campaign last year, and the Trump family has also expanded its cryptocurrency businesses.

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