Roving Periscope: Trump apes Mao to corner China, keep others on tenterhooks
Virendra Pandit
New Delhi: To corner China, US President Donald Trump, who boasts of making successful deals all his business life, may be following Mao Zedong’s strategy of “two steps forward, one back.” By suddenly pausing implementation of his tariff terror for three months, and pushing the import duty against Beijing further up to 125 percent, he may have brought some of his adversaries back into the White House’s tent, and isolated China to stew in its own juice.
No wonder China, which violated the World Trade Organization (WTO)’s rules at will and dumped its cheap and underperforming products in vulnerable countries for several years, is now accusing the US of violating the WTO’s rules!
Facing a global market meltdown, Trump on Wednesday abruptly backed down on his tariffs on most nations for 90 days. However, while praising Chinese President Xi Jinping as the “world’s smartest” person, he raised the tax rate on Chinese imports to 125 percent, the media reported on Thursday.
It appeared an attempt to narrow what had been an unprecedented trade war between the US and most of the world, to a showdown between the US and China. Several other nations heaved a brief sigh of relief that might enable them to look for options or to strike a deal with the US.
Reacting positively to this pause, however, some of the world markets also roared back. The S&P 500 stock index jumped nearly 7 percent after the announcement, but the precise details of Trump’s plans to ease tariffs on non-China trade partners were not immediately clear.
Trump posted on Truth Social that because “more than 75 countries” had reached out to the US government for trade talks and have not retaliated in meaningful way “I have authorized a 90-day PAUSE, and a substantially lowered Reciprocal Tariff during this period, of 10 percent, also effective immediately.”
The 10 percent tariff was the baseline rate for most nations that went into effect on Saturday last week. It’s meaningfully lower than the 20 percent tariff that Trump had set for goods from the European Union, 24 percent on imports from Japan and 25 percent on products from South Korea, among others.
Still, 10 percent would represent an increase in the tariffs previously charged by the US government—that’s the one decisive step Trump took forward! All else would be negotiated in the coming weeks and months.
The announcement came after the global economy appeared to be in open rebellion against Trump’s tariffs as they took effect Wednesday, a signal that even the US President was not immune from market pressures.
Business monarchs were warning of a potential recession caused by his policies, some of the top US trading partners are retaliating with their own import taxes and the stock market is quivering after days of decline.
But White House Press Secretary Karoline Leavitt spilled the beans, revealing that the walk back was part of some grand negotiating strategy by Trump.
“President Trump created maximum negotiating leverage for himself,” she said, adding that the news media “clearly failed to see what President Trump is doing here. You tried to say that the rest of the world would be moved closer to China, when in fact, we’ve seen the opposite effect– the entire world is calling the United States of America, not China, because they need our markets.”
But market pressures had been building for weeks ahead of Trump’s move.
Particularly worrisome was that US government debt had lost some of its luster with investors, who usually treat Treasury notes as a safe haven when there’s economic turbulence.
Government bond prices had been falling, pushing up the interest rate on the 10-year US Treasury note to 4.45 percent. That rate eased after Trump’s reversal.
Presidents often receive undue credit or blame for the state of the US economy as their time in the White House is subject to financial and geopolitical forces beyond their direct control.
But by unilaterally imposing tariffs, Trump is exerting extraordinary influence over the flow of commerce, creating political risks and pulling the market in different directions based on his remarks and social media posts.
There still appear to be 25 percent tariffs on autos, steel and aluminium, with more imports set to be tariffed in the weeks ahead.
Before Trump’s reversal, economic forecasters say his second term has had a series of negative and cascading impacts that could put the country into a downturn.
Treasury Secretary Scott Bessent has previously said it could take months to strike deals with countries on tariff rates, and the administration has not been clear on whether the baseline 10 percent tariffs imposed on most countries will stay in place.
But in an appearance on “Mornings with Maria,” Bessent said the economy would “be back to firing on all cylinders” at a point in the “not too distant future.” He said there has been an “overwhelming” response by “the countries who want to come and sit at the table rather than escalate.” Bessent mentioned Japan, South Korea, and India. “I will note that they are all around China. We have Vietnam coming today,” he said.
What’s not yet known is what Trump does with the rest of his tariff agenda. In a Tuesday night speech, he said taxes on imported drugs would happen soon.
