Kevin Hassett, in a discussion on Fox News, stated that the White House remains firm on not negotiating, yet various countries are reaching out about trade. Taiwan has initiated contact regarding tariffs, and Hassett reaffirmed his support for tariffs as a policy tool.
He mentioned that President Trump might consider trade deals if they offer substantial benefits. Hassett rejected the idea that a decline in negotiations could result in severe trade consequences, labelling such rhetoric as irresponsible.
Tariff Reduction Concerns
He also addressed his views on tariff reduction, suggesting that lowering tariffs to 10% overall may not lead to enduring improvements in risk assets, raising concerns about the sustainability of these changes.
This article summarises recent remarks from Hassett during an interview, where he clarified the current administration’s trade posture. The key takeaway is that there’s no intent, at least for now, to step back from tariffs or engage in broad-based negotiations. Despite this, other countries—Taiwan being a clear example—are taking initiative themselves, perhaps in anticipation of potential economic shifts or as a safeguard against future disruptions. Hassett reinforced his backing of tariffs, not just as a negotiation tactic, but as a longer-term mechanism of influence.
He stated that while the President may entertain trade deals, these must deliver meaningful outcomes, rather than being symbolic or politically expedient. Any suggestion that paused negotiations would immediately lead to economic harm was dismissed as alarmism, not fact-based argument.
Implications For Traders
Importantly, he touched on the idea that reducing tariffs to a flat 10% would, in his view, not necessarily produce real or lasting gains in assets tied to risk, such as equities and credit instruments. That implies limited upside for financial markets from such cuts, at least through the lens of his framework.
This has us paying close attention. For derivative traders, there’s an implication that narratives supporting tariff shifts may not translate into deep or consistent market moves. If policymakers aren’t planning to ease trade rules unless there’s a clear economic advantage, then positioning on the assumption of looser policy could prove premature. Volatility risk remains tilted towards policy surprise, especially if external pressures from other governments gather traction or trigger a re-evaluation.
From our perspective, it might be wise in the coming sessions not to anchor strategies solely on prospects of tariff relief. Instead, focus on near-term pricing inefficiencies arising from these mixed signals. With Hassett narrowing the outlook on upside potential from trade talks while reinforcing support for existing measures, directional exposure should probably be limited. Short-term instruments tied to equity volatility or currency swings could offer better responsiveness without needing long-dated commitments.
Additionally, Hassett’s scepticism about the durability of asset gains under lighter tariffs gives a clearer sense of where policymakers see economic resilience. That should nudge us to favour relative trades, particularly in sectors less reliant on smooth cross-border flows of goods. Watch for impulse moves tied to headlines from East Asian regions—especially those initiating contact—and avoid extending positions without confirmation of follow-through.
As optimism on broad negotiations fades, we’re more likely to see time decay in sentiment-driven options. Market participants looking to extract premium should consider tighter windows, shorter maturity, and scenarios that limit exposure to binary outcomes. There’s room for opportunity, but not if assumptions are based solely on speculation of policy softening.
