Trump tariff backflip brings a US trade war with China into the crosshairs

Donald Trump’s tariff announcement caused market turmoil, but he remained optimistic. After pausing some hikes, markets rebounded sharply, showcasing Trump’s ability to influence market confidence. Eyes now turn to China’s response.

You have to marvel at Donald Trump’s prescience. After his announcement of America’s new tariffs regime on April 2, “liberation day”, the stock markets plummeted, causing faint hearts around the world to quail. Nerves fluttered particularly hard when bond yields started to rise rapidly this week, suggesting a growing lack of confidence in US 30-year debt – traditionally the gold standard for security.

“I don’t want anything to go down,” Trump told a reporter at the weekend. “But sometimes, you have to take medicine to fix something.”

The US president remained bullish on Wednesday morning, taking to his TruthSocial social media platform at 9.37am EDT to proclaim his confidence in US stocks.

And so it proved. Hours later, Trump announced to his followers that he had decided to pause the tariff hikes on all but China while keeping the 10% baseline tariff on all imports. The markets bounced back with alacrity, closing up 9.5% by the end of trading. (Incidentally, Trump Media and Technology Group, the parent company of TruthSocial, closed up 22.67%.)

It just goes to show, faith may or may not be able to move mountains, but Donald Trump can certainly move markets.

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Now it’s all eyes on China to see how the world’s second-largest economy will react to a yet-higher tariff on its exports to the US of 145%.

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