Donald Trump has defended his controversial positions on tariffs and trade, even as global markets were buffeted by a disappointing start to the second half of the year.

At a meeting with the prime minister of the Netherlands, Mark Rutte, in the Oval Office on Monday, the president mused that the World Trade Organization had mistreated the US: “I hope they change their ways. They have been treating us very badly for many, many years and that’s why we were at a big disadvantage with the WTO.

“We’re not planning anything now, but if they don’t treat us properly we will be doing something,” Trump added.

At the same meeting, the president said his negotiators were “very close to making some very good trade deals – fair trade deals, I don’t want to say good, I want to say fair – fair trade deals for our taxpayers, and for our workers and for our farmers.”

Trump’s comments came even as signs mounted that administration policies on global trade were beginning to bite.

Goldman Sachs warned the second half of 2018 would be tough for investors as they grapple with rising tariffs and interest rates, while the latest survey of American factories by IHS Markit found that tariffs were driving up costs for US manufacturers and exacerbating a slowdown for eurozone members.

In another stark warning, JP Morgan warned that a full-blown trade war would punch a hole in global economic growth because of reduced trade volume, supply chain disruptions and lost confidence.

John Normand, the bank’s head of cross-asset fundamental strategy, said he believed that the worst-case scenario could reduce global growth by a “material” amount of at least 1.4% over the next two years.

Some effects are already being felt. The largest US nail manufacturer, Mid-Continent Nail, has laid off 60 workers and said it might be out of business by the end of the summer.

Warnings of a slowdown come as administration officials, including the president, continue to offer defiance as its single public policy position. On Sunday, Trump brushed off the mounting pressure from businesses and world leaders to scale back tariffs and taxes before November.



“The European Union is possibly as bad as China, just smaller,” Trump said on Sunday, pointing to the “car situation”.



Trump’s comments came in response to an 11-page European Union letter sent to the commerce department on Friday threatening that the global community would impose tariffs on up to $290bn of US products if Trump moves forward with tariffs on foreign autos, according to the Financial Times.

“Protective measures would undermine US growth, negatively impact job creation, and not improve the trade balance,” EU leaders wrote, adding that auto tariffs would “damage further the reputation of the United States”.

They are now finding themselves in rare agreement with former administration officials, including Anthony Scaramucci, a onetime close ally of the president and briefly his communications director.



“If the trade rhetoric and uncertainty continues, it will be very, very bad for the market and for the midterm election and other elements of the president’s strategy,” he told CNBC. “There’s been a seismic change in psychology in the markets in the last four to six weeks.”