WASHINGTON: US President Donald Trump 's 90-day hold on punitive tariffs on the world minus China has elicited a reciprocal pause from the European Union, momentarily isolating Beijing but giving the rest of the world respite to negotiate with Washington.
The jury is still out on whether Trump caved to intense pressure the US economy came under because of his tariff gambit or if it was planned brinkmanship. But the danger to global trade has not abated yet. The baseline 10 per cent tariff he imposed on the world is still in place, as also new levies on steel, aluminum and automobiles.
Still, the EU said it took note of Trump's decision to pause reciprocal tariff and is doing likewise "to give negotiations a chance," and even China indicated it is ready to talk -- provided the dialogue was conducted on an “equal footing” and on the “basis of mutual respect.”
Beijing, Chinese officials said, would not respond to “pressure, threats and blackmail” and it is prepared to “fight to the end.”EU President Ursula von der Leyen too warned that “If negotiations are not satisfactory, our countermeasures will kick in."
In the US meanwhile, Trump is being compared to an arsonist who sets fire to his own home and then pulls out a fire extinguisher to put it out even as neighbors and friends rush to help because it also endangers their homes. While MAGA mouthpieces projected Trump's brinkmanship as the work of a genius who took a leaf out of his "Art of the Deal," the liberal intelligentsia called it "Art of the Squeal" -- a gambit gone horribly wrong.
Trump aides though spun the President's tariff pause as a win, the outcome of "master strategy, bold statesmanship and brilliant tactical planning" which, according to his Deputy Chief of Staff Stephen Miller, "has done more to reform broken international trade in days than anyone has achieved in decades while economically and politically isolating the global architect of economic aggression: China."
The MAGA supremo though appeared to confirm that he backed down because Americans -- and the stock market -- got jittery with his strategy. "People were jumping out of line a little and getting a little yippy, a little bit afraid," he told reporters who asked why he decided to hit pause on his tariff imposition just hours into its enforcement.
The US President also revealed he was concerned about people "getting a little queasy" about the bond market, which also sank on Tuesday as the rest of the world began losing faith in the US economy and its stability after Trump tariff caper. Stock and bonds seldom go down together and typically move in opposite directions. "I was watching the bond market. It's very tricky. If you look at it now it's beautiful. But I saw last night where people were getting a little queasy," he said.
Market mavens and economic pundits later surmised that it was Japan’s -- not China’s -- sale of U.S Treasury bonds spooked the markets and forced Trump's hand to announce a 90-day suspension of tariffs (except for China). Japan holds more than $ 1 trillion in US bonds and China holds $ 760 billion.
The question now boils down to who among the US and China have greater resilience in this game of chicken, and who needs who more. The 125 percent US tariff on Beijing means China's export-driven economy will take a beating.
Just how much depends on whether China can find other markets to dump its goods and/or talk US back from the brink. At the same time, US consumers, brought up on cheap imports for a generation, will suddenly be paying more for everything from Apple products to Ziplock bags.
By midday Thursday, it became apparent that there is still plenty of sand in the global trade machinery and the danger to the US and world economy has not passed. The US stock market gave up almost half of its record run-up yesterday -- a surge that came even as Trump announced the 90-pause, and which is now attracting attention amid rumors of a "pump and dump" scheme by insiders.
After exhorting "THIS IS A GREAT TIME TO BUY!!!" on social media just hours before he pulled back on tariffs, Trump on Thursday posted "What a day, but more great days coming!!!" even as the market was tanking again.
The biggest outcome of the ongoing trade war, for now, appears to be the profound distrust of the US the MAGA supremo has generated around the world, something that will probably take a generation or more to repair and heal.
"Don’t think for a second that all that’s been lost is money. A whole pile of invaluable trust just went up in smoke as well," NYT columnist Thomas Friedman noted gloomily, calling Trump tariff gambit the "trade equivalent of the Biden administration’s botched exit from Afghanistan."
The jury is still out on whether Trump caved to intense pressure the US economy came under because of his tariff gambit or if it was planned brinkmanship. But the danger to global trade has not abated yet. The baseline 10 per cent tariff he imposed on the world is still in place, as also new levies on steel, aluminum and automobiles.
Still, the EU said it took note of Trump's decision to pause reciprocal tariff and is doing likewise "to give negotiations a chance," and even China indicated it is ready to talk -- provided the dialogue was conducted on an “equal footing” and on the “basis of mutual respect.”
Beijing, Chinese officials said, would not respond to “pressure, threats and blackmail” and it is prepared to “fight to the end.”EU President Ursula von der Leyen too warned that “If negotiations are not satisfactory, our countermeasures will kick in."
In the US meanwhile, Trump is being compared to an arsonist who sets fire to his own home and then pulls out a fire extinguisher to put it out even as neighbors and friends rush to help because it also endangers their homes. While MAGA mouthpieces projected Trump's brinkmanship as the work of a genius who took a leaf out of his "Art of the Deal," the liberal intelligentsia called it "Art of the Squeal" -- a gambit gone horribly wrong.
Trump aides though spun the President's tariff pause as a win, the outcome of "master strategy, bold statesmanship and brilliant tactical planning" which, according to his Deputy Chief of Staff Stephen Miller, "has done more to reform broken international trade in days than anyone has achieved in decades while economically and politically isolating the global architect of economic aggression: China."
The MAGA supremo though appeared to confirm that he backed down because Americans -- and the stock market -- got jittery with his strategy. "People were jumping out of line a little and getting a little yippy, a little bit afraid," he told reporters who asked why he decided to hit pause on his tariff imposition just hours into its enforcement.
The US President also revealed he was concerned about people "getting a little queasy" about the bond market, which also sank on Tuesday as the rest of the world began losing faith in the US economy and its stability after Trump tariff caper. Stock and bonds seldom go down together and typically move in opposite directions. "I was watching the bond market. It's very tricky. If you look at it now it's beautiful. But I saw last night where people were getting a little queasy," he said.
Market mavens and economic pundits later surmised that it was Japan’s -- not China’s -- sale of U.S Treasury bonds spooked the markets and forced Trump's hand to announce a 90-day suspension of tariffs (except for China). Japan holds more than $ 1 trillion in US bonds and China holds $ 760 billion.
The question now boils down to who among the US and China have greater resilience in this game of chicken, and who needs who more. The 125 percent US tariff on Beijing means China's export-driven economy will take a beating.
Just how much depends on whether China can find other markets to dump its goods and/or talk US back from the brink. At the same time, US consumers, brought up on cheap imports for a generation, will suddenly be paying more for everything from Apple products to Ziplock bags.
By midday Thursday, it became apparent that there is still plenty of sand in the global trade machinery and the danger to the US and world economy has not passed. The US stock market gave up almost half of its record run-up yesterday -- a surge that came even as Trump announced the 90-pause, and which is now attracting attention amid rumors of a "pump and dump" scheme by insiders.
After exhorting "THIS IS A GREAT TIME TO BUY!!!" on social media just hours before he pulled back on tariffs, Trump on Thursday posted "What a day, but more great days coming!!!" even as the market was tanking again.
The biggest outcome of the ongoing trade war, for now, appears to be the profound distrust of the US the MAGA supremo has generated around the world, something that will probably take a generation or more to repair and heal.
"Don’t think for a second that all that’s been lost is money. A whole pile of invaluable trust just went up in smoke as well," NYT columnist Thomas Friedman noted gloomily, calling Trump tariff gambit the "trade equivalent of the Biden administration’s botched exit from Afghanistan."
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