- Multiple members of the Trump administration on Wednesday began looking to downplay the potential fallout from the brewing trade battle between the US and China.
- China’s retaliatory tariff announcement sent the stock market tumbling as people worried about broader economic pain.
- Following soothing words from officials like Larry Kudlow and Wilbur Ross, the market rebounded.
Some of President Donald Trump’s top officials on Wednesday sought to walk back the possibility of a trade war with China as markets jolted up and down most of the day.
Perhaps the most soothing voice for investors and economists fretting over the possibility of a China-US trade war was Larry Kudlow, who replaced Gary Cohn last week as Trump’s top economic adviser.
“There’s no trade war here,” Kudlow said on Fox Business. “What you’ve got is the early stages of a process which will include tariffs, comments on the tariffs, then ultimate decisions and negotiations. There’s already back channel talks going on.”
Kudlow also told reporters on the White House lawn that “it’s possible” the tariffs will never actually be imposed. The proposed product list is currently open for comments and the US Trade Representative will review the comments until the end of May.
Following Kudlow's remarks, stocks rallied after tumbling to start of the day. The Dow Jones industrial average ended the day over 800 points above its low.
Commerce Secretary Wilbur Ross, who is generally more hawkish on trade, also attempted to offer some comforting words for people concerned about the economic downsides of a trade war.
"Even shooting wars end with negotiations. Somebody signs a treaty with someone else," Ross said on CNBC. It has whatever terms it has. So it wouldn't be surprising at all if the net outcome of all this is some sort of negotiation."
But Ross would not commit to such a negotiation getting done by the end of May, when the tariffs are supposed to go into effect.
Secretary of Agriculture Sonny Perdue also sought to assure farmers that the trade fight wouldn't hit their businesses, despite China targeting major US agricultural products as part of their retaliatory tariffs.
"I talked to the president as recently as last night," Perdue said during an event in Ohio. "And he said, 'Sonny, you can assure your farmers out there that we're not going to allow them to be the casualties if this trade dispute escalates. We're going to take care of our American farmers. You can tell them that directly.'"
White House press secretary Sarah Sanders declined to say Wednesday whether the tariffs were simply a negotiating tactic.
"I'm not going to get ahead of the process, where we are, we're in the review process, but certainly we expect China to make changes and stop the unfair trade practices they've participated in for decades," Sanders told reporters.
Sanders did say that declines in the stock market were not a concern.
"We may have a little bit of short-term pain, but we're certainly going to have long-term success and we're focused on long-term economic principles," Sanders said.
