Deal With It: Countries Seek Pacts With US to Avoid Tariffs 

Stage one: denial. Stage two: acceptance. Stage three: bargaining. Stage four: deals?

While markets spent the last week in a state of upheaval coming to terms with US plans to roll out global tariffs, Treasury Secretary Scott Bessent suggested Tuesday there is now potential for “some good deals.” How fast and where they come could dictate swings in equities.

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Since “Liberation Day” last week, the S&P 500 has fallen nearly 12%. Tariffs on about 90 economies, including China and the European Union, kick in today (enjoy your last tariff-free coffee beans this morning). All of which means, amid the market tremors, it’s apparently time to make deals. On Tuesday, Bessent said he’s fielding “a massive number of requests for negotiations” from at least 70 countries to avert prolonged duties on their goods.

That sounds positive — and US stocks kicked off the day higher after Bessent made his remarks and Trump touted a “great call” with South Korea’s acting president — but not enough to get equities out of their funk: 

• The S&P 500 ultimately closed 1.6% lower, and the Nasdaq finished down 2%, in large part because until deals roll in, the cyclical revenues of the multinationals that make up the index will remain under duress. As Morningstar put it Tuesday: “It seems likely that there could be a significant amount of negative sentiment in the market until there is greater clarity regarding the impact and duration of tariffs.”
• Morningstar cautioned that “now is not the time for most investors to be reaching too far down the risk spectrum,” and evidence shows foreign indexes are in for similarly bumpy trajectories. Take, for example, Japan, which is facing a 24% across-the-board tariff: after Bessent said the country is “going to get priority” in bilateral negotiations, the Nikkei rallied 6% on Tuesday amid the momentary optimism only to fall 3.9% on Wednesday as the cold, hard reality of tariffs sunk in.

Negotiations won’t be as simple as agreeing to remove trade barriers, which means they could take time. Trump, for example, wants Japan, South Korea, and Taiwan to join a $44 billion natural gas project in Alaska that would supply the East Asian countries starting in 2030.

No Deal: On Wednesday, China announced 84% tariffs on US imports that will kick in Thursday, a day after Trump’s whopping 104% tariffs on the world’s second-largest economy came into effect. One could say the US and China are in a Mexican standoff — but at least Mexico has USMCA.