Trump's approval ratings may hold clues to where US trade disputes are heading

In This Article:

  • The Trump administration has surprised markets when it comes to trade disputes and tariff announcements.

  • Analysts are looking at metrics, including approval ratings for U.S. President Donald Trump and stock market performance, as indicators for whether or not trade tensions will ease.

From the tariffs on steel and aluminum imports in March to July's list of $200 billion in Chinese goods that may be targeted by new American levies, the U.S. administration's trade policies have repeatedly caught markets off guard.

The U.S.- China trade war continues to simmer and the White House is trading tariff threats with other nations, so analysts are now looking beyond government pronouncements for alternative indicators that may clue them into where exactly America's ongoing disputes are headed.

Approval ratings

U.S. President Donald Trump trade offensive against Beijing coincided with a drop in his disapproval ratings, Nomura Chief Economist Rob Subbaraman and analyst Michael Loo wrote in a recent note.

"Perhaps President Trump's efforts to deliver on some of his harsher campaign rhetoric on trade are starting to shore up his core support base. Moreover, the data are in his favor: The U.S. trade deficit with China has increased over most of his presidency," the Nomura analysts wrote.

"Whether there is causality between Trump’s growing trade protectionism and his lower disapproval rating is unclear, but if he believes there is and continues to up the ante against China, the global economy will likely suffer," they added, referring to the decline in Trump's disapproval rating from 56 percent in December to the roughly 53 percent current figure, according to data analysis website FiveThirtyEight .

If, however, Trump's polling numbers suffer on any trade-linked issues, then that may mean the White House will take a more moderate approach with Beijing, according to Jasslyn Yeo, global market strategist at J.P. Morgan Asset Management.

Stock market

Aside from ratings, another indicator investors should watch for an easing in trade tensions is if the S&P 500 sees a "significant correction induced by trade fears," Yeo told CNBC.

The president has in the past linked his policies to stock market performance, having attributed stocks' record highs to confidence in his administration.

U.S. President Donald Trump tweet: The Stock Market hit 25,000 yesterday. Jobs are at an all time record - and that is before we fix some of the worst trade deals and conditions ever seen by any government. It is all happening!