WILLIAM BRANGHAM: The escalating# trade war between the U.S. and## China is continuing to inject uncertainty# into the world's two largest economies.

Over the weekend, President Donald Trump# and his top trade officials added to the## confusion by carving out new exemptions# for tariffs on electronic products.

In the Oval Office today, reporters pressed## President Trump on where this# tumultuous trade war is heading.

DONALD TRUMP, President of# the United States: Look, I'm## a very flexible pe.. WILLIAM BRANGHAM: The president declined## to specify what products might# be exempt from future ta.. DONALD TRUMP: I don't want to hurt# anybody, but the end result is,## we're going to get to the position# of greatness for our country.

WILLIAM BRANGHAM: This morning,# Wall Street opened on a high note,## markets reacting positively to the weekend# announcement of exemptions for smartphones,## computers and other tech carved out of the# Trump administration's sweeping global tariffs.

But those celebrations may be brief, as U.S.# trade policy continues to swing back and forth.

On## Sunday, the president told reporters on Air Force# One that there could be tariffs coming on iPhones.

DONALD TRUMP: Well, that's# going to be announced very soon,## and we will be discussing it, but# we will also talk to companies.

WILLIAM BRANGHAM: But, yesterday,# Commerce Secretary Howard Lutnick## was definitive that new tariffs are coming for# tech products made with semiconductor chips.

HOWARD LUTNICK, U.S. Commerce Secretary: These# are included in the semiconductor tariffs that## are coming and the pharmaceuticals are# coming.

Those two areas are coming in## the next month or two.

So this is not# like a permanent sort of exemption.

WILLIAM BRANGHAM: All of this after a# dramatic week for Wall Street.

On April 2,## President Trump announced massive# tariffs on most of the world.

DONALD TRUMP: My fellow# Americans, this is liberation day.

WILLIAM BRANGHAM: A week later,# he walked back most of them,## saying he'd begin a 90-day negotiation period.

But tariffs on Chinese-made# goods were not paused.

Instead,## they were increased to 145 percent.

That left# some tech companies like Apple in the lurch.

LIN JIAN, Chinese Foreign Ministry Spokesperson# (through translator): The U.S. uses tariffs as## a weapon for extreme pressure and self-interest,## placing its own interests above# those of the international community.

WILLIAM BRANGHAM: China has remained firm# against what it calls bullying from America,## adding their own 125 percent# tariffs on U.S. goods.

Today, Beijing also escalated by halting exports# of certain rare earth minerals and magnets,## critical components for computer chips, cars# and many kinds of electric motors and other## technologies.

Chinese President Xi Jinping has# been reaching out to other countries.

Today,## he kicked off a tour of Southeast Asia in# Vietnam, signing a series of agreements.

In Washington, President Trump said he likes# President Xi, but not his meeting with Vietnam.

DONALD TRUMP: I don't blame China.# I don't blame Vietnam.

I see they're## meeting today.

Isn't that wonderful?

And# it's a lovely meeting.

They're meeting## like trying to figure out, how do we# screw the United States of America?

WILLIAM BRANGHAM: For now, markets appear to be# optimistic, as tech companies help to lift Wall## Street today.

The Dow Jones industrial# average finished up by more than 300## points.

The Nasdaq notched its own 100-point# gain, and the S&P climbed by 0.8 percent.

So, for more on how this trade war is playing out,# we turn again, as we often do, to David Wessel.## He's the director of the Hutchins Center on Fiscal# and Monetary Policy at the Brookings Institution.

David, always great to have# you back on the program.

Help us understand something.

When you look# back at the last few weeks of this trade war,## imbroglio, however you want to describe it,## can you discern a strategy# from the administration here?

DAVID WESSEL, Brookings Institution: In# short, no.

It seems to be incoherent.## Different voices in the administration# say different goals for the tariffs.

Are## they to raise money to cover the cost of# tax cuts?

Are they a negotiating tool for## the president to get more access to foreign# markets for us?

Are they national security?

So I think we do know that# the president likes tariffs,## and his staff is determined to find# ways to justify them.

And, secondly,## there is a clear attempt to get more manufacturing# to return from the U.S., particularly in goods## like pharmaceuticals and semiconductors# that he considers national security.

WILLIAM BRANGHAM: I mean, the supporters of# the president argue that this may be messy,## but that the pain is going to be worth the gain,## that this is -- as some have put it, that# this is watching art of the deal unfold.

Do you see anything that is unfolding here that# could be strengthening America's negotiating hand?

DAVID WESSEL: I don't, William.

I'm afraid that the president has weakened# our standing in the world economy.## If the goal was to put pressure on China, then# the one would think the goal would have -- the## tactic would have been to get allies like# Canada, Mexico and Europe on our side.

So I think it's very hard.

The -- Chris# Waller, who's the chair of a -- member## of the Federal Reserve board, said today# that it's the biggest shock that the world## economy has seen in a long time, and that one# problem is both the policy and the effects are## uncertain.

And that doesn't seem a great# recipe for building a strong economy here.

WILLIAM BRANGHAM: On that shock to the U.S.# economy, where is that most being felt right now?

DAVID WESSEL: Well, in our# country, it's being felt,## I think, by businesses and maybe some# consumers just pulling back.

If you're## not sure what the policy of the government# is going to be on the goods that you import,## or the parts you need to make your product,# you're going to be less willing to expand.

So there's a lot of talk about uncertainty.# And I think what that means is, if you're## not -- if it's not clear what's going to# happen, you pull back.

If everybody delays,## that's how we get a recession.

And a lot of# forecasters are anticipating a recession.

One really worrisome sign here is not the# stock market, but what's happened to the## bond market and the value of the dollar.

And,# basically, yields on treasury bonds have gone up,## the value of the dollar has gone down.

And# some people are interpreting that as an## indication that the world is less confident# about the safety of investing in the U.S. And that would be a long -- if# that's true, if that persists,## that will have long-lasting# effects, and they're not good ones.

WILLIAM BRANGHAM: You mentioned the concern# over a possible recession.

Polls certainly## show that consumers are concerned about that.# Some major Wall Street firms are the same.

Do you feel that's a legitimate# concern?

Are we really at risk of that?

DAVID WESSEL: Well, at risk, sure.# But is it likely?

I don't know.

It## depends.

It depends how quickly the# president gets his act together.

And if this is a negotiating tool and we# have some deals, maybe they're cosmetic,## but allows him to back off, we have# a 10 percent across-the-board tariff,## but that's all it is, and some strategic# tariffs, if things calm down, if it looks## like adults are in charge in Washington,# that would reduce the risk of recession.

And some depends on what the Federal Reserve# does here.

The Federal Reserve is an awkward## position.

On one hand, tariffs will make prices# go up.

On the other hand, they could make the## economy grow more slowly.

And so they have to# decide, at what point do they act?

So far, it## looks like they're sitting on their hands.

That's# not going to be helpful to avoid a recession.

WILLIAM BRANGHAM: All right, David# Wessel of the Brookings Institution,## always so good to hear your# counsel.

Thank you very much.

DAVID WESSEL: You're welcome.

I'm# sorry I couldn't be more upbeat.