US President Donald Trump abruptly paused tariffs on most countries, sparking euphoria on global markets yesterday, but upped the ante on a brutal trade war with superpower rival China.
After days of turmoil, stocks on Wall Street and across Asia saw huge surges in reaction to Trump’s announcement that he was halting a levy hike for almost all nations for 90 days.
However, Trump also said he was raising tariffs on China to 125 percent because of a “lack of respect.”
Photo: AP
Beijing hit back with retaliatory levies of 84 percent on US imports, which came into effect just after midday yesterday, the latest salvo in an escalating standoff between the world’s two largest economies.
Trump has denied that he backtracked on the tariffs, telling reporters that “you have to be flexible.”
“People were jumping a little bit out of line, they were getting yippy, a little bit afraid,” Trump said. “Yippy” is a term in sports to describe a loss of nerves.
He said he had been watching the “very tricky” state of the crucial US bonds market before his decision.
“I saw last night where people were getting a little queasy,” he said, as US bond yields rose during the stocks sell-off — a major economic red light, as US sovereign government debt is normally seen as a safe haven for investors in troubled times.
Trump also predicted that trade deals would be made with all countries, including China, which has for now refused to roll back retaliatory tariffs on US goods.
“A deal’s going to be made with China. A deal’s going to be made with every one of them,” Trump said, but China’s leaders “don’t quite know how to go about it.”
Trump also said that he “can’t imagine” increasing Chinese tariffs more than he has.
As Beijing weighs the costs of further escalation, Bloomberg reported that its top leadership was to meet yesterday to hash out plans for additional stimulus to boost its fragile economy — already ailing before the trade war.
Wall Street stocks rocketed on Trump’s pause announcement.
The S&P 500 surged 9.5 percent to 5,456.90, snapping a brutal run of losses over the past week.
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