Allan Sloan: Dear Trump, Quit Negotiating in Public. The Markets Need a Break.

In a social-media post last week, President Trump said he would place an additional 100% tariff on China starting Nov. 1. (Win McNamee/Getty Images)

About the author: Allan Sloan is an independent business journalist and seven-time winner of the Loeb Award, business journalism’s highest honor.

Dear President Donald Trump,

You may be a dandy dealmaker and a nifty negotiator, but you’ve got a bargaining habit that you should really curb. It destabilizes financial markets, sometimes to the tune of trillions of dollars, and hurts the U.S. economy.

The habit that I am talking about, Mr. President, is negotiating by issuing public statements as an initial offer, then retracting some or all of what you said.

A prime example involves what you said on Friday, Oct. 10, and then revised on Sunday, Oct. 12. Those statements had a big impact on the U.S. stock market.

On Oct. 10, you wrote on your Truth Social network that in November, you would impose an additional 100% tariff on imports from China. Which you then dialed back on Oct. 12 by posting “Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment” on Truth Social.

But bargaining in public can be destabilizing, as you can see from what happened to the U.S. stock market starting on Oct. 10.

The market tanked that day. Big time. It lost $1.76 trillion in value, according to the Wilshire 5000 Total Market Index. Then on Monday, Oct. 13, the first trading day after your Oct. 12 dial-back, the Wilshire rose by $1.02 trillion. A two-day swing totaling a bit under $2.8 trillion. That’s trillion, with a “t.” We’re talking serious money—and serious instability.

Yes, there were factors other than what you wrote on Oct. 10 and what you wrote two days later that influenced the stock market. But your statements were the major motivators of the market’s 13-digit fall on Oct. 10 and its 13-digit rise on Oct. 13.

So to keep things simple—and to highlight your influence on the financial markets—let’s attribute the whole Oct. 10 fall and Oct. 13 rise to you.

Why am I telling you that this is a problem? After all, what you said publicly on Oct. 10 undoubtedly got the attention of China’s President Xi Jinping, which probably strengthened your bargaining position. And what you wrote on Oct. 12 led to the market recovering 60% of the Oct. 10 losses on Oct. 13.

The problem involves something that market mavens know about, but that the general public doesn’t.

It is that the kind of thing that you did on Oct. 10 and Oct. 12 increases volatility in the financial markets. That, in turn, increases the risk premium that professional investors and professional lenders demand before they put their money into stocks or make loans.

That increases the cost of capital, which acts as a drag on the economy.

That then slows down the growth of jobs, which is important to many MAGA and non-MAGA types. Especially now, with employment growth slowing and maybe even reversing.

If you had gotten Xi on the phone and said you would add 100% to tariffs on Chinese imports if Xi didn’t come across—as opposed to the public statement that you made on Oct. 10 and the backpedaling on Oct. 12—you would have accomplished the same thing without inflicting fear and instability on the financial markets.

Besides, you’ve said the big, new tariff threat is still in place if China doesn’t comply. What did you gain by changing your tune?

You’ve been attacking the Federal Reserve for keeping interest rates at levels that you consider too high, which you say hurts the economy.

But the instability that you inject into the financial markets and the economy by bargaining in public rather than in private is hurting the economy, too. Maybe even more than the Fed’s interest rates are hurting it.

So if you want to reduce the risk premium, help the economy, and stimulate job growth, you should do your bargaining over economic matters with China and the rest of the world in private, not in public.

Sure, this means that you will be getting less attention than you get now by saying whatever comes to mind without thinking about its impact. But our country—and in the long run, even you—will be better off if you put a lid on it. And keep it there.

Sincerely,

Allan Sloan

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