The big market sell-off turns out to have been an unintended consequence of a Trump negotiating tactic: putting pressure on our country’s Nafta partners and opposite numbers in the Trans-Pacific Partnership talks. It was all a negotiating feint.

Yesterday, the President suggested to both Reuters and Bloomberg that Canada and Mexico can win exemptions from the steel and aluminum tariffs by making concessions in the trade talks. This is a reckless way to bully our trade partners and damaging to market confidence, but it is a negotiating tactic which the unpredictable president likes to use. He said the US “is not backing down on tariffs” but that he “doesn’t expect a trade war.” He said Canada can avoid metal tariffs with a “new and fair” Nafta deal which “treats our farmers much better” while Mexico has to “stop drugs from pouring into the US.”

Meanwhile, Treasury Secy Steven Mnuchin says the President “will consider… going back into the TPP” (Trans-Pacific Partnership) if the right offer comes along.

Policy shocks which hurt Wall Street and the dollar have consequences beyond the short-term. Danger lurks in the confusing tactics of the Administration, on gun control, bank regulation, taxation, a new sub-Hudson tunnel, addiction treatment, and dozens of other major policy issues. Unfortunately, the US cannot negotiate on issues with the variable geometry of a real estate and media empire like Trump used to run.

Even if the trade war is averted, the vulnerable industries have been tagged. To the rye and bourbon liquors from Kentucky and Tennessee that I reported the Europe Union will use to retaliate against the US if tariffs are imposed, add blue jeans and hogs (Harley-Davidson motorcycles), as reported in yesterday’s Wall Street Journal. These iconic USA products are innocent bystanders hit by an escalation in the trade wars. Automakers are the most vulnerable to retaliation by the US because luxury items are a nono to Melania and Ivanka in the Trump household, Ivanka because of her business interests, and Melania because she needs all the help she can get at her age.