The Dow fell 400 points, or 1.6%, on Friday afternoon. The Nasdaq lost 2%, while the S&P 500 retreated 1.5%.
Stocks had been trading higher earlier Friday, but the market turned sharply lower following conflicting messages coming out of the Trump administration about trade.
“We’ve gotten a hodge-podge of mixed messages from people in the same administration,” said Art Hogan, chief market strategist at B. Riley FBR. “We’re not sure who we’re supposed to listen to.”
Senior administration officials have alternated between good-cop and bad-cop on the trade front.
Kudlow told CNBC on Friday that the trade talks with China are “extremely promising.”
Kudlow, director of Trump’s National Economic Council, said that Trump has indicated he might be willing to extend the 90-day negotiating window if there’s “good, solid movement and good action.”
Navarro, the trade hawk of the White House, struck a different tone on CNN. Asked whether the administration would walk away if issues with China are not resolved within 90 days, Navarro suggested Trump would “simply raise” existing tariffs on $200 billion worth of Chinese goods.
If China fails to change its ways on trade, “we have a president that’s going to stand up to that for once,” Navarro said.
Navarro also championed the nearly $12 billion that the United States has raised from tariffs, even though that money is being mostly paid by American consumers and businesses.
“We keep getting conflicting reports out of those guys,” said Joe Saluzzi, co-head of trading at Themis Trading. “The markets are confused.”
Trump himself has added to the confusion. While Trump has spoken of a desire to make a deal with China, the president also alarmed some investors by calling himself a “Tariff Man” on Twitter on Tuesday. That tweet was blamed for helping to send the market plunging.
Yet on Thursday evening, Trump said on Twitter that he agrees with a recent encouraging statement from China expressing confidence of a trade agreement within 90 days.
“Today is a microcosm of what we’ve had all week: mixed messages,” said Hogan. “Every message has contradicted itself.”