Opinions
Trump’s Tariff Reversal: A Case of Market-Driven Wavering
What makes Donald Trump blink? So far he hasn’t backtracked on his broadly aggressive, incoherent and dangerous policy of lumping high tariffs, eventually, on almost all America’s trading partners. His tit-for-tat animosity towards China has produced a position that, if fully implemented, seems likely to end most direct trade between the world’s two biggest economies. The past week brought whiplash for anyone trying to keep up with the early stage of his global trade war.
Yet Mr Trump is not a steadfast man. I can almost hear the chortles of satisfaction from China after his embarrassing reversal this weekend. This concerns those awfully tough-sounding 100%-plus tariffs on imports from China. Mr Trump has said they won’t apply to certain consumer electronics. That means computers and phones, or the bits that make them, shipped from China to America won’t be taxed at the high rate. And, yes, semiconductors, solar cells and more will also be excluded. Let me announce my new, strict daily exercise regime in similar news. You won’t believe how impressively tough it is. (Sidenote: I will exempt myself from working out on weekdays. And at weekends.)
That massive, tech-sized hole in Mr Trump’s trade policy towards China will take some explaining. And now, just two days later, it’s unclear whether chips might be included after all. All this to-and-fro obviously makes a mockery of the wider tariffs. My hunch: plenty of other firms will be whispering in Mr Trump’s ear in the coming days, promising all sorts of bonanzas for America’s economy, if only even more tariffs are suspended or lifted. I expect there are more exceptions and adjustments to come.
Mr Trump, it turns out, is quite a blinker. He does waver in the face of market worries, after all. In Trump 1 the stockmarkets helped to keep him in check. This time around he seemed to shrug those off. Now it’s clearer where his limits are: it is the bond markets that have a purchase on him. The unexpected sales of Treasuries, midweek, helped to force the postponement of higher-level tariffs on most economies until (at least) July. That Donald Truss moment was a telltale sign: how strong will the president’s resolve be the next time Treasury yields rise fast?
In our latest story on America’s self-inflicted economic wounds, we look at the damage a flight from the dollar could do to the country’s already dire public finances. Meanwhile, in Britain, economic worries are more traditional-sounding: the steel industry is almost dead, with the last blast furnaces (for virgin steel) in the country on the brink of closing down. Britain’s government, worried about the political and strategic consequences of this, has just passed legislation in extraordinary fashion, in response. Don’t be surprised if it eventually nationalises the Chinese-owned outfit that runs the last plant, in Scunthorpe.
Many thanks for your recent messages, including your bids for the world’s worst airports. I’m struck by the hostility that many of you feel towards Frankfurt (Jim Radford, of Canada, calls it “antiquated”, not least because of the heavy use of buses) and Mexico City (Karl Eysenbach laments a lack of places to sit). John Hastings, of Haverford, Pennsylvania, relates a miserable experience in an unheated hangar-like building in Chisinau, Moldova, followed by an unnerving Aeroflot flight. John, your experience sounds grim indeed, but it was 30 years ago. I suspect Moldova has come on in leaps and bounds since then.
Finally, I’d like your views on Mr Trump’s apparent peacemaking efforts in Ukraine. His envoy has met Vladimir Putin three times, so far, including a get-together in St Petersburg, to discuss a possible ceasefire. At the same time, Russia continues to attack Ukrainian cities from the air.
The author Adam Roberts, is a digital Editor of “The Economist”
Comments
