A new risk is quietly brewing in global markets—and it’s rooted in a fundamental misunderstanding.

Recent tariff negotiations between the U.S. and its trade partners have been shaped by a flurry of mixed signals from within the U.S. administration itself. While key advisors close to President Trump have conveyed a willingness to negotiate, the true nature of these talks appears to be fundamentally misunderstood—not just by foreign governments, but also by members of the President’s own team.

Earlier this week, markets responded positively to comments suggesting flexibility. A rally in equities was sparked by statements pointing toward possible negotiations, which many interpreted as a sign that the U.S. might be open to adjusting or even lowering tariffs. The European Union, taking these signals at face value, proposed a “zero for zero” tariff approach—essentially a mutual agreement to eliminate certain tariffs on both sides.

But here’s the problem: that completely misses the point.

President Trump’s stance on trade has never truly been about tariff levels abroad. It’s not about crafting symmetrical trade relationships. It’s about one thing—reducing the U.S. trade deficit by any means necessary.

This misunderstanding runs deep. Even countries offering to eliminate tariffs altogether, like Vietnam, have been met with rejection. Why? Because the administration views the trade deficit as a symptom of a larger issue: U.S. businesses outsourcing production and fueling foreign economies at the expense of domestic growth.

In Trump’s view, foreign nations aren’t just competing—they’re capitalizing on an imbalanced system. And the solution isn’t to make trade easier abroad, but to boost economic activity within U.S. borders. For Trump, the goal is clear: support American businesses by driving more purchases of U.S.-made goods.

The EU’s proposal, for instance, was brushed aside not because it wasn’t generous, but because it didn’t address what the administration truly wants—more direct purchases of American products. Trump even laid out an example: Europe could simply buy $350 billion worth of U.S. energy. That’s not a negotiation; that’s a directive.

This is why the current rhetoric is so dangerous. If foreign governments enter these talks thinking that tariff reductions are the key to resolving tensions, they’re going to be blindsided. Worse, this misalignment in expectations creates a high risk of a policy or market “accident”—a sharp, unexpected reaction driven by misunderstanding, not substance.

The bottom line is this: these negotiations aren’t about trade fairness—they’re about economic rebalancing. Trump isn’t negotiating in the traditional sense. He’s setting terms. And until everyone’s reading from the same script, the markets remain on edge.