Facing a global market meltdown, President Donald Trump on Wednesday abruptly backed down on his tariffs on most nations for 90 days, but raised the tax rate on Chinese imports to 125%.
It was seemingly an attempt to narrow what had been an unprecedented trade war between the US and most of the world to a showdown between the US and China. The S&P 500 stock index jumped nearly 7% after the announcement, but the precise details of Trump’s plans to ease tariffs on non-China trade partners were not immediately clear.
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The 10% tariff was the baseline rate for most nations that went into effect on Saturday. It’s meaningfully lower than the 20% tariff that Trump had set for goods from the European Union, 24% on imports from Japan and 25% on products from South Korea. Still, 10% would represent an increase in the tariffs previously charged by the US government.
The announcement came after the global economy appeared to be in open rebellion against Trump’s tariffs as they took effect Wednesday, a signal that the US president was not immune from market pressures.
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“President Trump created maximum negotiating leverage for himself,” she said, adding that the news media “clearly failed to see what President Trump is doing here. You tried to say that the rest of the world would be moved closer to China, when in fact, we’ve seen the opposite effect the entire world is calling the United States of America, not China, because they need our markets.”
But market pressures had been building for weeks ahead of Trump’s move.
Particularly worrisome was that US government debt had lost some of its luster with investors, who usually treat Treasury notes as a safe haven when there’s economic turbulence. Government bond prices had been falling, pushing up the interest rate on the 10-year US Treasury note to 4.45%. That rate eased after Trump’s reversal.
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“Markets more broadly, not just the Treasury market, are looking for signs that a trade de-escalation is coming,” he said. “Absent any de-escalation, it’s going to be difficult for markets to stabilize.”
John Canavan, lead analyst at the consultancy Oxford Economics, noted that while Trump said he changed course due to possible negotiations, he had previously indicated that the tariffs would stay in place.
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Presidents often receive undue credit or blame for the state of the US economy as their time in the White House is subject to financial and geopolitical forces beyond their direct control.
But by unilaterally imposing tariffs, Trump is exerting extraordinary influence over the flow of commerce, creating political risks and pulling the market in different directions based on his remarks and social media posts. There still appears to be 25% tariffs on autos, steel and aluminum, with more imports set to be tariffed in the weeks ahead.
On CNBC, Delta Air Lines CEO Ed Bastian said the administration was being less strategic than it was during Trump’s first term. His company had in January projected it would have its best financial year in history, only to scrap its expectations for 2025 due to the economic uncertainty.
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“Simultaneous shocks to consumer sentiment, corporate confidence, trade, financial markets as well as to prices, new orders and the labor market will tip the economy into recession in the current quarter,” said Joe Brusuelas, chief economist at the consultancy RSM.
Treasury Secretary Scott Bessent has previously said it could take months to strike deals with countries on tariff rates, and the administration has not been clear on whether the baseline 10% tariffs imposed on most countries will stay in place. But in an appearance on “Mornings with Maria,” Bessent said the economy would “be back to firing on all cylinders” at a point in the “not too distant future.”
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What’s not yet known is what Trump does with the rest of his tariff agenda. In a Tuesday night speech, he said taxes on imported drugs would happen soon.
* Original Article:
https://english.aawsat.com/world/5130452-kim-jong-uns-sister-says-north-korea-denuclearization-daydream?amp