AA Edit | As Trump Blinks on Tariffs, Most Nations Breathe Easy

Donald Trump blinked first. In the face of a tidal wave of criticism from friends, donors, foes and dire warnings from economists that the United States would also be facing a financial meltdown, he backed off while hitting the pause button for a promised 90 days on tariffs except for a basic 10 per cent on all countries, but an unimaginably punitive 125 per cent on China.

The global trade war has not ended; only it will be a battle between the two largest economies now. As the single front war threatens to grind on, only time will tell if Trump has actually seen the light on how foolish his extraordinary tariff regime appears to be and so pulled the world back from the precipice of uncertainty as global stock markets crashed, wiping out $10 trillion in market capitalisation in a day’s trading.

Is it wise advice from those around him, but who were not inner circle trade advisers who had egged him on to impose tariffs on the world, or his simply bowing to pressure from the billionaires who funded his election, including Elon Musk whose Tesla too would have

suffered from tariffs too, the net result is global trade can breathe easy. At least for a while, because what a demagogue like Trump will do next is anybody’s guess.

There may be some logic to the theory that a major sell-off in the bond market, from which the US government funds itself, was the principal reason why Trump was forced to see that he and his advisers like Peter Navarro may not have been right in this silly zero-sum game that showed nil understanding of how trade deficits had to be handled without causing widespread global disruption.

A blanket 10 per cent tariff seems a far more balanced way to try and correct the historical advantage that countries trading with America enjoyed as they built up their own economies.

The wide trade imbalance with China needs to be corrected but it cannot be achieved by disrupting the entire global supply chain. Any more than 10 per cent as tariff could be damaging not only to global trade but also prove self-destructive for the US that was certain

to suffer from inflation as importers pay the bills before passing it on to consumers. That would not only prove inflationary but also stifle growth through unsustainable tariffs.

In 24 hours, the US President had created more chaos than occupants of the White House may have done in their entire terms of four years. While aides who tried to deflect the truth of Trump fearing that his tariff bombshell could explode in his face, he himself admitted that people were “getting a little bit afraid”. That must be the understatement of the millennium as stock, bond and oil markets plummeted and the US dollar weakened to indicate where a predatory US tariff regime could lead America and the world to.

And yet the businessman in him is never dormant as Trump advised his countrymen through the social media to buy when the US bourses were about to open and the decision to pause had not yet been made public. His critics may have described him as a clown, but in playing the world as if he were a circus master, Trump has done more damage to qualities like trust, belief and faith in leaders and the systems they head.

The question is whether Trump has learnt his lesson after his cocky celebration of “Liberation Day” went awry. Considering his disruption of several things in the US in a little over 100 days — from exporting migrants like cattle, dismantling departments of his

government, shutting foreign aid, denying colleges funding and terrorising students on campuses, targeting law firms, etc. — the world can only wait and watch, with bated breath.