Does Trump Have an ‘Off Ramp’ From His Trade Fight?

No letup in sight

Frenzied selling is gripping global markets for a third straight session, with the S&P 500 and Nasdaq futures deeply in the red, along with a clobbering in European and Asian stocks, as President Trump digs in on tariffs. A new wave of duties is set to take effect this week that could further upset global markets.

Trump continues to say he doesn’t care about the stock markets. But last week’s greater than $5 trillion hit to the S&P 500 may be weakening his hand as talks continue with U.S. trading partners. And business leaders — even those that had supported the president’s agenda heading into last week’s tariff announcement — are growing publicly anxious about whether Trump can manage to find an off ramp.

Here’s the latest: Crypto, oil, most commodities and the dollar are all lower. The S&P 500 is on the brink of entering a bear market, defined as falling more than 20 percent from its mid-February highs. Analysts at Morgan Stanley warn that another drop of up to 8 percent is possible.

The Cboe Volatility Index, Wall Street’s so-called fear gauge, spiked on Monday to a level last seen in the early days of the coronavirus pandemic.

The Fed seems in no hurry to bail out investors. Jay Powell, the central bank’s chair, signaled on Friday that the inflationary effects of “the significantly larger than expected” tariffs have put the central bank in wait-and-see mode.

What will Trump do next? For now, the president said that despite the market plunges, he intends to stay the course. “I don’t want anything to go down, but sometimes you have to take medicine to fix something,” he told reporters on Air Force One on Sunday, returning from a golf-filled weekend in Florida.

Other Trump administration officials followed suit. “I see no reason that we have to price in a recession,” Treasury Secretary Scott Bessent said on NBC’s “Meet the Press” on Sunday.

But Trump may be starting to losing support. Some Republicans, including Senator Ted Cruz, Republican of Texas, have voiced concern that tariffs could lead to the “terrible outcome” of a tit-for-tat trade war.

And Bill Ackman, the billionaire investor and Trump supporter who initially backed the tariffs, warned that the next wave of retaliatory levies, set to take hold on Wednesday, would be the equivalent of “economic nuclear winter” that would destroy “confidence in our country as a trading partner.”

“The president is losing the confidence of business leaders around the globe,” Ackman added. (The investor also took a jab at Commerce Secretary Howard Lutnick — increasingly a target among some in the Trump orbit over how the tariffs fight is playing out — accusing him and his former firm, Cantor Fitzgerald, of being “long bonds,” and thus profiting when “our economy implodes.”)

Wall Street continues to sound a dire warning. The bear case broadly is that the tariffs will trigger a full-blown trade war that upends global commerce, ignites inflation and pushes the U.S. closer to recession.

The bull case comes from Trump, who has long said that trade wars are good, and easy to win. “Forget markets for a second,” he said. “We have all the advantages.”

But more bad news could force Trump’s hand. “My base case is that Trump will need to back down over the coming days,” Mohit Kumar, an economist at Jefferies, wrote in a research note on Monday. (Kumar added that Trump would do so “in a way that he can claim victory.”)

HERE’S WHAT’S HAPPENING

A longtime Tesla bull gets bearish on the automaker. Dan Ives, an analyst at Wedbush Securities who had long championed Elon Musk’s car company, slashed his target for its stock price to $315 from $550, citing tariffs and Musk’s polarizing role in the Trump administration. Musk publicly argued for a “zero-tariff situation” between the U.S. and Europe, while the market for used Teslas is booming as owners sell their vehicles, in many cases to protest Musk’s government work.

President Trump claims to have nearly struck a deal for TikTok. He told reporters on Air Force One this weekend that his administration had been close to clinching a deal with Beijing to bring in new, non-Chinese ownership of the video app — until China objected to his wave of tariffs and imposed retaliatory levies of 34 percent. Trump suggested that he could still reach an accord: “If I gave a little cut in tariffs, they’d approve that deal in 15 minutes, which shows you the power of tariffs,” he said.

Inflation data and a new earnings season are the big focus this week. The Bureau of Labor Statistics is set to release the Consumer Price Index report on Thursday; investors had been worried about inflation, even before the tariff barrage. Earnings calls should offer clues about how companies are adapting. Delta Air Lines reports on Wednesday. Major Wall Street firms including BlackRock, JPMorgan Chase and Morgan Stanley go on Friday.

Dimon’s warning on tariffs

With President Trump’s tariffs dominating the headlines, it was inevitable that Jamie Dimon would tackle the topic in his latest letter to JPMorgan Chase shareholders, published on Monday.

The wave of levies, Dimon writes, may be rooted in legitimate concerns. But the way the trade fight is playing out risks short-term pain and long-term damage to the global economic order, he adds.

Tariffs will “slow down growth,” though it’s too early to say a full-blown recession is coming, Dimon writes. While the U.S. economy had been “rather healthy and steady” for years, it had already begun weakening before Trump’s tariff announcement. (His own analysts warn that a recession is more likely than not this year.)

Dimon notes that there’s still a lot unknown about how the tariffs fight will play out, including how other countries will respond; the effects on consumers and investors’ confidence; what might happen to the dollar; and more.

In the short term, he writes, “We are likely to see inflationary outcomes, not only on imported goods but on domestic prices, as input costs rise and demand increases on domestic products. How this plays out on different products will partially depend on their substitutability and price elasticity.”

Dimon writes that inflation was already built into his global outlook, given high and “not sustainable” fiscal deficits, remilitarization across the world and a need for more infrastructure investment.

There are longer-term implications, Dimon writes. Among them: whether America’s long-term economic partnerships suffer. The consequences could be severe:

Our long-term strategic goals should be crystal clear: to maintain the cohesion and strength of the Western world, including their economies. If the Western world’s military and economic alliances were to fragment, America itself would inevitably weaken over time.

A fragmenting of Europe and disruption to longtime alliances could force nations to seek out partnerships with the likes of Russia, Iran and China. “America First is fine, as long as it doesn’t end up being America alone,” Dimon writes.

Dimon’s words reflect the uncertainty dominating Wall Street, which has been bracing for more chaos. Traders and hedge funds have been nursing losses. Deal-making — a business that bankers had hoped would pick up this year, with the prospect of deregulation and tax cuts under Trump — has instead stalled, with several big I.P.O.s having been postponed.

Dimon writes that JPMorgan, whose traders can profit off the market volatility, won’t necessarily suffer. But, he adds, “It is not particularly good for the capital markets.”

Expect him to face more questions from analysts about his outlook when JPMorgan reports quarterly results on Friday.

“Wall Street’s one of our biggest problems. They’re the ones that’s really standing up and pushing back against President Trump.”

— Senator Tommy Tuberville, Republican of Alabama, speaking on Fox News on Sunday when asked about the widespread market sell-off following President Trump’s sweeping tariff plan.

“Americans who want to retire right now, the Americans who put away for years in their savings accounts, I think they don’t look at the day-to-day fluctuations.”

— Treasury Secretary Scott Bessent, speaking on NBC News’s “Meet the Press” on Sunday about the tariffs’ hit to stocks.

“The army of millions and millions of human beings screwing in little, little screws to make iPhones — that kind of thing is going to come to America.”

Howard Lutnick, the commerce secretary, arguing on CBS News’s “Face the Nation” that Trump’s economic policies would bring back domestic manufacturing jobs. (Worth noting: Little screws are a particular challenge for Apple.)

Washington Post tech workers to unionize

Jeff Bezos, the founder of Amazon and the owner of The Washington Post, will soon have to contend with another union drive.

Technology workers at The Post are forming a collective bargaining group to negotiate for greater job security, increased compensation and more flexibility toward remote work, Benjamin Mullin is first to report.

More than 300 workers are eligible to join the guild, and a majority have already signed union cards, said Luke Connors, a senior software engineer at The Post who is on the organizing committee. Connors said that the organizers planned to hand-deliver a formal request to company leaders to recognize the union on Monday morning. A company spokeswoman declined to comment.

It is the first public union drive at the paper since it was purchased by Bezos in 2013. (The newsroom has been represented by a guild for decades.) Amazon has fought efforts in the past to unionize its fulfillment centers..

The organizing effort comes at a turbulent time for The Post. Changes to its opinion section, including a decision to end its tradition of endorsing presidential candidates, have resulted in losses of thousands of subscribers and prompted the departure of prominent journalists. The company lost more than $100 million last year.

But Connors said he thinks The Post can afford to pay its tech workers more despite those setbacks.

“I don’t think we should lose sight of the fact that The Post is owned by the second-richest person in the world,” Connors said. “We haven’t been struggling with these problems of losing very large chunks of subscribers due to product decisions, but based on unforced errors made by our owner and the C.E.O.”

Connors said that the push to organize its workers, which has been ongoing for more than a year, was accelerated by a decision announced by the C.E.O. Will Lewis to require employees to work from the office five days a week. Layoffs have also been a factor, including a round of cuts announced on Friday that eliminated 25 positions.

The upheaval has led to widespread dissatisfaction with Lewis, a longtime lieutenant of the media titan Rupert Murdoch. Well-known Post alumni have tried to persuade Bezos to replace Lewis, to no avail.

Many workers in the tech industry are at-will employees, meaning they can be laid off without warning. A notable exception is at The New York Times, where tech workers voted in 2022 to unionize.

Connors said tech workers at The Post want to begin negotiating a contract with the company as soon as possible. “Our salary range is completely dwarfed by what you see at the other major tech companies,” he said.