Tariff Roll Back Or Not? Markets Certainly Don’t Know.

The uncertainty extends even to whether or not a Part 1 trade deal between the United States and China will even get signed in 2019.

Yesterday, China’s Ministry of Commerce spokesman Gao Feng said negotiators had “agreed to remove additional tariffs in phases as progress is made on the agreement. And White House economic adviser Larry Kudlow  said that “if there’s a phase one trade deal, there are going to be tariff agreements and concessions.”

Today, however, President Donald Trump said that the U.S. hasn’t agreed to roll back tariffs on China. “They’d like to have a rollback; I haven’t agreed to anything,” Trump told reporters. “China would like to get somewhat of a rollback–not a complete rollback, because they know I won’t do it.” And White House trade adviser Peter Navarro told Yahoo News that there are no tariff roll backs in the Part 1 agreement. Any reports to the contrary are “mis-reporting” by Western media and an effort by China to influence ongoing negotiations.

President Trump also revived questions Friday about the location for signing any deal with Chinese President Xi Jinping. Yesterday’s reports had U.S. sites in Iowa and Alaska ruled out and said that sites in Europe and Asia were until consideration. Trump voiced a different conclusion today.“Assuming we get it, I don’t like to talk about things until they happen, but it could be Iowa or farm country or some place like that,” Trump said. “It will be in our country, but it could be some place like that.”

Trump even seemed to throw doubt on reports that the deal would get signed in 2019. “We’ll see what happens,” the president replied when a reporter asked if the agreement would be concluded in 2019.

Today U.S. markets are treating this confusion as just the usual way this White House announces policy–that is with minimal coordination. The Standard & Poor’s 500 closed up 0.26%. The more export sensitive Dow Jones Industrial Average edged up 0.02%. The technology sector turned in another good day with the Technology Select Sector SPDR ETF (XLK) finishing up 0.55%. That helped the tech-heavy NASDAQ Composite end the day 0.55% higher. The small cap Russell 2000 index gained 0.22%.

Emerging markets didn’t take the confusion quite in stride with the iShares MSCI Emerging Markets ETF (EEM) down 0.91%.