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The so-called TACO trade will be tested as market respond to President Donald Trump’s announcement on Friday night that he will double steel tariffs to 50%. Meanwhile, administration officials sounded upbeat that the Trump and President Xi Jinping could sort out snags in U.S.-China trade talks.
Stocks pointed slightly lower Sunday night after President Donald Trump reignited trade war fears by doubling down on steel tariffs on Friday.
The so-called TACO trade will be tested as markets wait to see if Trump will actually follow through with his latest threat or if he will put it on hold soon.
Futures for the Dow Jones Industrial Average dropped 89 points, or 0.21%. S&P 500 futures slipped 0.23%, while Nasdaq futures fell 0.31%.
The yield on the 10-year Treasury was essentially flat at to 4.442%. The dollar fell 0.21% against the euro and 0.31% against the yen.
Gold rallied 0.63% to $3,309.50 per ounce. U.S. oil prices climbed 2.1% to $62.08 per barrel despite OPEC+ agreeing to another surge in supply.
On Friday night, Trump said he will hike steel tariffs to 50% from 25%, prompting a retaliation threat from the European Union over the weekend.
The steel duty announcement came days after a U.S. trade court rule that the legal basis for Trump’s reciprocal tariffs was invalid. But his tariffs on certain industries, including steel, aluminum and autos, rests on a separate order that’s based on national security.
Meanwhile, administration officials sounded upbeat that the Trump and President Xi Jinping could sort out snags in U.S.-China trade talks.
That’s after Trump claimed Beijing had violated an agreement reached in Geneva, Switzerland, last month, when both sides slashed their respective tariffs from prohibitively high levels. China also agreed to reopen access to rare earths, but the U.S. said it was slow-rolling compliance with the pact.
On Sunday, Treasury Secretary Scott Bessent sought to de-escalate the rhetoric, telling CBS’s Face the Nation that the two heads of state could ease logjam.
“I’m confident that when President Trump and Party Chairman Xi have a call that this will be ironed out,” he said.
When asked about a timeline for a call, Bessent replied, “I believe we will see something very soon.”
Meanwhile, markets are headed for a big week of economic data and commentary as Wall Street waits for more clues on how much tariffs are impacting the economy.
On Monday, the Institute for Supply Management’s manufacturing index will come out. On Tuesday, the Labor Department will issue its job openings and labor turnover report. On Wednesday, ADP publishes its private-payrolls data. On Thursday, the Labor Department will release weekly jobless claims, ahead of its monthly jobs report on Friday.
