Trump announces suspension of tax negotiations, US economy receives new information

President Donald Trump said on May 16 that the US would announce tariffs on trading partners within the next two to three weeks, instead of continuing negotiations with individual countries.

Many countries have approached the US and asked to negotiate individual deals, but Mr Trump stressed that the US "cannot meet with everyone who wants to meet with us". "At the same time, we have 150 countries that want to make a deal," Mr Trump said.

President Trump said that US Treasury Secretary Scott Bessent and US Commerce Secretary Howard Lutnick would be responsible for sending letters detailing the new tariffs to each country. "The new tariffs will be very fair, but we will let people know how much they will have to pay to do business in the United States," Mr. Trump added.

The White House has not yet disclosed the contents of the letters or the exact tariffs that will be imposed. It is unclear whether countries will be given a timeline or conditions for changing the tariffs.

On the same day, credit rating agency Moody's announced that it was downgrading the US rating by one notch, from the highest level of Aaa to Aa1. Previously, in 2023, they adjusted the US credit outlook from "stable" to "negative", due to increasing fiscal deficits and interest payments.

"Successive US administrations and Congresses have failed to agree on policies to reverse the trend of rising fiscal deficits and interest payments," Moody's explained.

Stephen Moore, a former senior economic adviser to US President Donald Trump, called the move “absurd.” “If US government bonds are not rated at the highest level, what is?” he told Reuters.

"This was very unexpected. The market was completely caught off guard," said Tom Di Galoma, director of rates and trading at Mischler Financial. US stocks were spared the impact, having been closed earlier.

US President Donald Trump (Photo: Reuters).

The S&P 500 rose 0.7% to close at 5,958. The tech-heavy Nasdaq Composite rose 0.52% to 19,211. The Dow Jones Industrial Average rose 332 points, or 0.78%, to 42,655.

For the week, the S&P 500 rose 5.3%, the Dow Jones rose 3.4% and the Nasdaq rose 7.2%. With that result, all three indexes have turned into positive status since the beginning of the year.

Technology was the biggest gainer this week. Large-cap tech stocks were bought back by investors after the US and China reached a tariff truce. Previously, these stocks were sold off heavily when tensions between the world's two largest economies escalated. Investors on Wall Street are also hoping for more clarity on the trade situation in the coming weeks.

In the energy market, Brent crude oil futures in London increased by 0.88 USD/barrel, equivalent to an increase of 1.36% to 65.41 USD/barrel. WTI crude oil futures increased by 0.87 USD/barrel, equivalent to an increase of 1.41%, to close at 62.49 USD/barrel.

Previously, two other major rating agencies, Fitch and S&P Ratings, also downgraded the US credit rating. S&P Ratings downgraded the US credit rating from AAA to AA+ in August 2011, and Fitch Ratings made a similar move in August 2023, downgrading the world's number one superpower's credit rating from AAA to AA+.

Since returning to the White House, Mr. Trump has vowed to rebalance the budget. Treasury Secretary Scott Bessent has also repeatedly stated that their goal is to reduce borrowing costs for the United States.

However, their efforts to increase revenue and reduce public spending have so far failed to convince investors. The work of the Office of Government Efficiency (DOGE), led by billionaire Elon Musk, is falling short of its initial goals.

Measures to increase import tax revenue have raised concerns about trade wars and a global economic slowdown, causing markets to fluctuate sharply.

If left unchecked, these concerns could lead to a sell-off in bonds and hamper the Trump administration’s ability to implement its agenda. US government bond yields rose following the Moody’s report.

Source: https://dantri.com.vn/kinh-doanh/ong-trump-tuyen-bo-dung-dam-phan-thue-kinh-te-my-don-thong-tin-moi-20250517111241032.htm