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    The Guardian view on Trump’s tariffs: the courts have drawn a line. So must Congress | Editorial

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    If one thing is more challenging to the rule of law than a genuine emergency, it is the invention of a phoney one. Since returning to the White House in January, President Donald Trump has upended global trade and international relations, wiping billions off the stock market in the process, by imposing tariffs that he claims are a necessary response to an emergency. Yet that emergency does not really exist, except in the manner that Mr Trump himself has created it.The president claimed, on 2 April, that a lack of reciprocity in US overseas trade arrangements was “an unusual and extraordinary threat to the national security and economy of the United States”. He claimed that this justified him in declaring an emergency and governing by executive decree under the 1977 International Emergency Economic Powers Act (IEEPA). Congress, which normally has the responsibility to decide US trade policy, was thus wholly ignored. Statutory consultative arrangements, traditionally an essential preliminary, went out of the window too. Mr Trump was effectively exercising an executive power grab.Now, after this week’s ruling by a US federal trade court, most of Mr Trump’s tariffs have been blocked. In a case brought by a coalition of businesses and US states, the court of international trade found that most of the tariffs “exceed any authority granted” to the president under the 1977 law. The White House will appeal. Meanwhile, trade talks aimed at creating so-called deals between the US and nation-state victims of the Trump policies are likely to be paused, while existing deals, including that with the UK, may be affected too.There will be a worldwide sense of relief for as long as it lasts. But the higher courts now face an important political responsibility as well as a judicial one. The ruling has left nations and businesses hanging. Some tariffs will remain, such as those on steel, aluminium and cars. Many others are suspended. Markets hate uncertainty.The issues at stake are very large. They are immediate, because the ruling suspends many but not all tariffs, and also strategic, because it challenges Mr Trump’s wide-ranging attempts to rule by executive order. Both are extremely important. Global trade and economic recovery, in Britain among many other countries, rest on the outcome. But so does Mr Trump’s strategy, which dates back to his first term, of using IEEPA powers to rule by decree, not merely on trade issues but, for example, in sanctioning officials from the international criminal court.The good news is that the president’s plans to impose tariffs on almost every country on the planet will now be subjected to something approaching the legal and constitutional scrutiny that they should have had in the first place. The rule of law, thankfully, has struck back, at least for now.The bad news is that Congress still shows no sign of reining Mr Trump in, as it should. Ironically, the IEEPA was originally a Jimmy Carter-era legislative attempt to boost congressional oversight of presidential emergency powers. Under Mr Trump, that role has been trashed. The worst of all outcomes would be for Congress to now give Mr Trump the powers to which he has laid claim. That is a real danger. The best outcome would be for Congress to give the IEEPA a fresh set of teeth. These would ensure that emergency powers are properly defined and applied, and never again abused by this or any other overmighty president.

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      ‘Trump always chickens out’: Taco jibe ruffles president’s feathers

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      Trump Always Chickens Out – or Taco for short. Investors like narratives to explain the financial world, and they appear to have seized on this one: whenever Donald Trump faces a market backlash, he will back down.It would be fair to say the US president did not take kindly to the suggestion that he was being a “chicken” when asked by a reporter at the White House about the term that is gaining traction on Wall Street.“Oh isn’t that nice – ‘I chicken out.’ I’ve never heard that,” Trump mused on Wednesday in response to the reporter’s question on the so-called Taco trade. He then launched into extended comments on how high the tariffs he imposed on China were, and how he had “helped” China by cutting them.“But don’t ever say what you said,” he added to the reporter. “That’s a nasty question.” Apparently riled, he later returned to the theme, insisting that he was no chicken, and that often people accused him of being too tough.But recurrent retreats by Trump have become the basis for stock markets rebounding after falls, even as the US president has raised tariffs to their highest level in more than a century.The S&P 500, the US stock market benchmark, has gained about 1% during 2025, despite a deep slump in April as Trump announced “liberation day” tariffs on trade with most countries in the world.The stock market rise appears to have been aided by the Taco trade narrative: that market turmoil will correct the president’s course and allow companies to keep on making strong profits. That belief will strengthen if courts uphold Wednesday night’s ruling by New York’s court of international trade that Trump’s tariffs have been imposed illegally.When the Financial Times columnist Robert Armstrong coined the Taco acronym on 2 May, it was a pithy observation of market reaction to Trump’s chaotic policymaking. However, less than a month on, one question is whether being accused of being “chicken” will needle the president to take a harder line with trading partners.On some fronts – notably on transporting people to El Salvador without due process – the Trump administration has indeed defied barrages of criticism and several court orders. Yet on financial markets, the pattern is clear of a harsh initial position followed by a sizeable retreat. The partial climbdowns have often followed close behind slumping bond prices – increasing US government borrowing costs – a dynamic that could expose the world’s largest economy if left unchecked.skip past newsletter promotionafter newsletter promotionThe liberation day tariff announcement was followed by a 90-day pause. Trump said he would raise EU tariffs to 50%, before delaying that until 9 July. He ratcheted up levies to a punitive 145% on China, before dropping them to 30% during a 90-day pause. And he toyed with forcing out the Federal Reserve chair, Jerome Powell, only to backtrack quickly once investor displeasure became clear.However, the market optimism has not matched economic forecasts, which suggest that the White House’s actions are still historically significant. More

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      JP Morgan chief warns of ‘complacency’ as markets look past credit downgrade

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      JP Morgan chief executive Jamie Dimon warned on Monday that investors were being too complacent as markets shook off news that the US has lost its last triple-A credit rating amid fresh concern over the federal government’s burgeoning debt pile.Credit ratings agency Moody’s dealt a blow to Washington on Friday when it stripped the US of its top-notch rating, downgrading the world’s largest economy by one notch to AA1 and become becoming the last of the big three agencies to drop its triple-A rating for the US.The announcement unnerved markets on Monday morning, but stock markets had recovered by the end of the day.Speaking at JP Morgan’s annual investor day meeting in New York, Dimon warned against complacency. “We have huge deficits; we have what I consider almost complacent central banks. You all think they can manage all this. I don’t think [they can],” he said.Dimon said he saw an “extraordinary amount of complacency” and added that he believes the possibility of stagflation – a recession with rising prices – was far higher than investors believe.Moody’s downgrade came as Donald Trump struggles to push his “big, beautiful” tax and spending bill through Congress, Moody’s said it expected the US budget deficit to keep rising.“Successive US administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,” Moody’s said, announcing its downgrade. “We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration.”Trump administration officials sought to play down the significance of the setback. “Moody’s is a lagging indicator,” Scott Bessent, the treasury secretary, told Meet the Press on NBC on Sunday.The US president has himself remained silent on the downgrade. On Monday morning, he used posts on his Truth Social platform to criticize celebrities including Beyoncé and Bruce Springsteen, who castigated Trump on stage in Manchester last week, for supporting his political rivals.During a rare Sunday night vote, House Republicans advanced Trump’s tax cut and spending package out of a key committee. It has been estimated that the proposed bill could add as much as $5tn to the US’s $36.2tn debt pile over the next decade.On Wall Street, the benchmark S&P 500 fell during early trading, before recovering its losses to close marginally higher, while the tech-focused Nasdaq also closed broadly flat after reversing early declines. The FTSE 100 rose 0.2% in London.Bond markets also came under pressure, with the yield on 30-year US treasury bonds climbing 13 basis points to 5.026%. Yields rise as bond prices drop; an increase signals that investors are seeking a higher return for holding US debt. The dollar weakened against a basket of currencies.“Over the next decade, we expect larger deficits as entitlement spending rises while government revenue remains broadly flat,” said Moody’s. “In turn, persistent, large fiscal deficits will drive the government’s debt and interest burden higher. The US’s fiscal performance is likely to deteriorate relative to its own past and compared with other highly rated sovereigns.” More

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      Stock markets rise as Trump backtracks on high China tariffs and firing Fed chair

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      Stock markets have risen around the world after Donald Trump said his tariffs on China would come down “substantially” and he had “no intention” of firing the chair of the US central bank, Jerome Powell.Weeks of tough talk on trade from White House officials have rattled investors and Trump now appears to be softening his tone. The president told reporters in Washington on Tuesday he planned to be “very nice” to China in trade talks and that tariffs could drop in both countries if they could reach a deal, adding: “It will come down substantially, but it won’t be zero.”Overnight in Asia, Japan’s Nikkei rose by nearly 2%, Hong Kong’s Hang Seng was up 2.4% and the South Korean Kospi gained 1.6%.The rally spread to Europe in early trading on Wednesday, with the UK’s FTSE 100 index up 1.6%, while the Italian FTSE MIB rose by 1.1%. Germany’s Dax gained 2.6% and France’s Cac 2.1%.Meanwhile, US stocks opened on a high Wednesday morning, with the Dow rallying over 800 points, and the Nasdaq Composite up over 3%. The rally stalled in the afternoon but all the major stock markets managed to end the day higher.On Wednesday, the US treasury secretary, Scott Bessent, also took a softer, optimistic tone on China in remarks delivered at the Institute of International Finance in Washington DC, saying that China “knows it needs to change”.“If China is serious on less dependence on export-led manufacturing growth and rebalancing toward a domestic economy … let’s rebalance together,” Bessent said. “This is an incredible opportunity.”Bessent told investors in a private meeting on Tuesday that he expects a “de-escalation” of the trade war between China and the US in the “very near future”.“‘America First’ does not mean America alone. To the contrary, it is a call for deeper collaboration and mutual respect among trade partners,” Bessent said on Wednesday.Investor confidence also grew after Trump told reporters he would not fire Powell, the chair of the US Federal Reserve, reversing the previous day’s losses triggered by the president calling the central bank boss a “major loser”.The president has criticised the Fed chair repeatedly for refusing to cut interest rates and last week hinted that he believed he could dismiss Powell before his term as the head of the central bank comes to an end in May next year.Trump wrote on his social media platform, Truth Social, last week that Powell’s termination “could not come fast enough”, after the Fed chair raised concerns about the impact of trade tariffs on the American economy.However, the suggestion from the White House that the US central bank will remain independent helped stocks to rise on Wednesday, as well as the prospect of lower tariffs on Chinese imports to the US.The US dollar, which hit a three-year low on Tuesday before recovering, rose by 0.25% against a basket of major currencies.Oil prices also rose on Wednesday, with Brent crude rising above $68 (£51) a barrel amid hopes that lower tariffs will be less damaging to the global economy. The rise was also led by new US sanctions targeting Iranian liquefied petroleum gas and the crude oil shipping magnate Seyed Asadoollah Emamjomeh.Meanwhile, gold, which is traditionally viewed by investors as a safe haven asset during volatile periods, retreated from the new high of $3,500 (£2,620) an ounce it hit on Tuesday, to trade at about $3,307. More

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      The Guardian view on the IMF’s warning: Donald Trump could cost the world a trillion dollars | Editorial

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      Wake up! When the most sober of global institutions, the International Monetary Fund, abandons its usual technocratic calm to sound the alarm on the political roots of global financial instability, it’s time to pay attention. The IMF is warning of a non-negligible risk of a $1tn hit to global output, as Donald Trump’s erratic “America first” agenda – part oligarchic enrichment scheme, part mobster shakedown – collides with a perfect storm of global financial vulnerabilities.Such a shock would be equivalent to a third of that experienced in the 2008 crisis. But it would be felt in a much more fragile and politically charged environment. This time, the crisis stems not just from markets but from the politics at the heart of the dollar system. The IMF’s latest Global Financial Stability Report sees the danger in Mr Trump’s trade policies, especially his “liberation day” announcements, which have pushed up America’s effective tariff rate to the highest in over 100 years.The IMF put investors on notice that Trumpian volatility was taking place as US debt and equities – especially tech stocks – were overvalued. It cautions that hedge funds have made huge bets that have gone sour, requiring them to sell US treasuries for cash and potentially deepening the chaos in bond markets. Ominously, the IMF draws the comparison, first made by the analyst Nathan Tankus, with the “dash for cash” in March 2020 during Covid, when the Federal Reserve rescued US treasury markets directly. Developing nations, already grappling with the highest real borrowing costs in a decade, may now be forced to take on even more expensive debt – the IMF warns – just to cushion the blow from Mr Trump’s new tariffs, risking a dreaded “sudden stop” in capital flows.At the heart of this chaos stands the US, the very country meant to uphold the global financial architecture. Just over a week ago, Adam Tooze of Columbia University wondered if markets had begun to “sell America” after US long-maturity bond prices fell precipitously. He thought that markets were no longer just responding to economic fundamentals but to politics as a systemic risk factor. In this case: Mr Trump’s tariff threats and his increasing political pressure on Fed’s chair, Jerome Powell. In essence, Prof Tooze gave us the theory; the IMF just confirmed the data.The US president’s continued attacks on the Fed chair over the weekend have only added to a flight from US equities, bonds and the dollar itself. The money is fleeing to safe havens such as gold. Some of the loss has been clawed back, but at what cost? Investors aren’t just jittery about inflation or growth – they’re hedging against political chaos. That might explain the seemingly divergent IMF messaging: blunt systemic warnings in its report versus the soothing market-facing comments from a senior official at the fund’s press conference. This is central bank diplomacy. The institution is signalling that it is worried while trying not to spark a self-fulfilling panic in treasuries and the dollar.The real concern here is not technical dysfunction in treasury markets or the mechanics of the Fed, which are the bedrock of the global financial system. It’s about the politicisation of the monetary-fiscal nexus under a Trumpian regime that is fundamentally hostile to the norms of liberal-democratic governance. When even the dollar is no longer a safe haven, what – or who – can be?Do you have an opinion on the issues raised in this article? If you would like to submit a response of up to 300 words by email to be considered for publication in our letters section, please click here. More

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      US stock markets expected to recover after Trump drops tariffs on mobiles

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      US stock markets were expected to stage a recovery on Monday after Donald Trump excluded imports of smartphones and laptops from his tariff regime late on Friday night.Shares in Apple and chip maker Nvidia were on course to soar after tariffs on their products imported into the US were lifted for 90 days.The temporary reprieve was widely seen as a climbdown after pressure from Republican leaders concerned that the soaring cost of smartphones would spark a voter backlash. US retailers import about 80% of all smartphones, many of them from China, which Trump has slapped with tariffs totalling 145%.US Customs and Border Protection said items like laptops, hard drives, smartphones, flat-panel monitors and some chips would qualify for the exemption. Vital machines made outside the US that are used to make semiconductors were also excluded.It means these products will avoid the China tariff and the 10% baseline tariffs applied on other countries caught by the new regime.Speaking on Air Force One on Saturday evening, Trump said he would be more specific about the latest exemption rules on Monday. “We’ve been making a lot of money,” he said. “It’s been the other way around. Other countries, in particular China was making a lot of money.”It is not clear how long the exemption will last or whether separate tariffs will be negotiated on the specific products.China has responded with a tariff on all US exports of 125%. Beijing said at the weekend that the reprieve for smartphones was a “small step” toward easing the trade fight between the world’s two biggest economies.skip past newsletter promotionafter newsletter promotionHowever, the US commerce secretary, Howard Lutnick, said the reprieve was likely to be lifted in 90 days and reiterated Trump’s longstanding plan to apply a different, specific levy to the sector.Speaking on NBC, he said: “All those products are going to come under semiconductors, and they’re going to have a special focus-type of tariff to make sure that those products get reshored. We can’t be relying on China for fundamental things that we need.”Lutnick dismissed interpretations of Trump’s reprieve that argued it reflected the president’s realisation that his China tariffs were unlikely to shift more manufacturing of smartphones, computers and other gadgets to the US in the near future.On Sunday Trump warned that no country would be getting “off the hook” on his punishing tariffs, again singling out China for criticism. “NOBODY is getting ‘off the hook’ for the unfair Trade Balances,” Trump wrote in a post on his Truth Social platform. “Especially not China which, by far, treats us the worst!”Apple has spent decades building up a finely tuned supply chain in east Asia, including inside China. The firm has pledged to move some facilities back to the US over the next four years, which will cost it $500bn, including constructing a giant factory in Texas for artificial intelligence servers but was expecting to retain much of its international network as it expands its sales.Trump’s move at the start of April to impose tariffs on imports to the US battered the stocks of tech’s magnificent seven – Apple, Microsoft, Nvidia, Amazon, Tesla, Google parent Alphabet and Facebook parent Meta Platforms.At one point, they lost $2.1tn, or 14% of their value, from 2 April. Shares have recovered since last Wednesday after Trump paused the tariffs except on China, allowing tech firms to use India and other conduits to import smartphones. More

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      Worried about your stock market savings as Trump tariffs wreak havoc? Don’t panic

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      This week was enough to make anyone worried about their stock market savings. As a certified public accountant, I don’t give investment advice. But I’m comfortable leaving my money in the stock market. Why? Let’s put things into perspective.Markets are still way upMany younger millennials and gen Z-ers may be panicking about recent falls in the market. But we’ve been here before – and worse. In March 2009, the Dow Jones Industrial Average lost more than half its value from the levels it reached less than two years before. In the past 15 years it has increased sixfold.Today’s economic problems are not as severe as 2009. Corrections happen, and rumors move markets. Which is why the Dow Jones average is down about 15% from its high back in November. However, it’s still at the highest level it’s ever been from before late 2022.Despite losses – and there will always be more losses – overall, people who invested in the markets over the past decade are still in very good shape.The economy is OKLast month the economy added more than 228,000 jobs, despite shedding hundreds of thousands of government workers. Meanwhile, other indices remain strong. True, manufacturing slipped into contraction last month – but that’s not really news, considering that – other than a few blips – it has been in contraction for years. Service industries are in their ninth consecutive month of expansion. Unlike 2009, capital is available and our banking system is strong. Consumers continue to spend. Wages are outpacing inflation.It’s too early to judge Trump’s tariff movesYes, Donald Trump’s trade war is disruptive. Maybe in the next few months – or a little longer – the smoke clears. We’ll see how this plays out. Maybe Trump’s decision to force the US economy to “take the medicine” so early in his administration aims to time this upside towards the end of his term. I wouldn’t be surprised to see more market volatility based on rumors, guesses and people trying to get attention for themselves. But I wouldn’t expect them to tank like they did in 2008.Growth policies under wayThere are also some very pro-growth policies under way and more coming.Like it or not, regulatory oversight from the federal government has already been scaled back thanks to a bunch of executive orders and the dismantling of agencies. This will help business owners keep their eye on their businesses, rather than the federal government. More importantly, both the House and Senate are moving to debate and then finalize a number of tax decreases which will include extending or making permanent many of the tax benefits from the 2017 Tax Cuts and Jobs Act as well potentially eliminating taxes on capital gains, overtime, social security and tips.All of this won’t happen, but some of it will and when it does consumers may have more in their pockets and businesses will enjoy a further long-term boost that should encourage more investment and growth.A cooling of inflation?The bond market thinks that inflation will cool down. That’s because bond yields have significantly decreased over the past few weeks. When inflation is expected to fall, so do yields. These traders think that – despite tariffs – there will be enough of a slowdown to dampen price increases and encourage the Federal Reserve to lower interest rates. Will the slowdown cause a recession? Maybe. But lower interest rates mean a lower cost of borrowing. It also helps reduce the government’s spending towards paying down debt.One big beneficiary of lower interest rates would be the residential real estate industry – which represents up to 18% of the US economy. Many homebuyers (and sellers) have been holding back due to higher interest rates. But now that bond yields are falling, so too are mortgage rates (which are also based on future inflation). In late 2023 the average mortgage rate was about 8%. Now it’s close to 6.5%. We’re getting close to a tipping point that could ignite this market. As we head into the spring and summer I would expect to see more buyers and sellers come out of hiding.I’m sure plenty of economists, academics and pundits will argue with these takes. The bottom line: don’t sell your stocks. Hold firm. History shows that, unless you speculate or get lucky with an isolated home run, investing in the broad stock market via mutual and index funds generally outpaces all other investments. If you have excess cash, consider putting more into these funds. Of course, consult a competent wealth adviser and evaluate your specific risks. But relax. You’ll be fine. More

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      No retreat on tariffs, Trump promised. Hours later, he blinked

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      He vowed: “My policies will never change.” He insisted: “Sometimes you have to take medicine to fix something.” He boasted: “I know what I’m doing.” And at 9.33am on Wednesday, he entreated: “BE COOL. Everything is going to work out well.”But less than four hours later, Donald Trump blinked. As the economic and political pressure became unbearable, the US president announced on social media that he would pause for 90 days higher trade tariffs for most countries, excluding China.It was a dramatic climbdown by a leader who has spent years cultivating the image of a strongman able to project indifference through every storm. White House aides immediately swung into gear, attempting to spin the retreat as the masterstroke of peerless dealmaker and genius chess player.The damage had been done, however. Damage to America’s standing as an honest broker and dependable ally. Damage to the US dollar and financial system as the world’s anchor of financial stability. And damage to Trump’s reputation on his signature issue, the economy, in the eyes of business leaders, Republicans and voters.“It’s obviously far too soon to talk about a failed presidency, but to me there are clear indications that Donald Trump’s presidency is endangered,” said Larry Jacobs, director of the Center for the Study of Politics and Governance at the University of Minnesota. “That’s an extraordinary statement for month three, but he’s taken such extreme measures and the responses are unusual, particularly for Republicans. They’re very demonstrative and they’re very directed at his power.”The past two weeks have witnessed the most volatile period for financial markets since the coronavirus pandemic lockdowns five years ago. This time, however, the cause is not a highly contagious virus but the grievances and whims of one man.On 2 April, standing in the White House Rose Garden, Trump announced sweeping “reciprocal” tariffs on dozens of countries, billing it as a “declaration of economic independence” on a “liberation day” that would restore America’s “golden age”. After decades of getting ripped off, he claimed, “it’s our turn to prosper”.The tariffs were calculated based on a country’s trade deficit with the US divided by the value of goods imported from that country. The formula was immediately criticised for inaccuracies and absurdities, such as assigning tariffs to Heard Island and McDonald Islands, which are inhabited entirely by penguins.Yet in Trump’s telling, the long-threatened tariffs were a necessary measure to restore US manufacturing and address trade imbalances. The Rose Garden event was attended by workers in hard hats and yellow construction vests – a reminder of how Trump has sought to steal Democrats’ identity as the party of the working class.Some analysts on the left and the right agree that the US industrial midwest was hit hard by globalisation with factories shuttered, communities hollowed out and jobs shipped overseas. But few believe that Trump, who for decades has believed that the US is getting ripped off, and his sledgehammer approach to tariffs are the right solution.Bill Galston, a senior fellow at the Brookings Institution thinktank in Washington, said: “I have always believed that his understanding of when America was great was in the 1950s and 1960s, when 30% of the workforce was in manufacturing and when the rest of the world was flat on its back and America bestrode the world like a colossus.“His dream is to restore that America to the greatest extent possible, and he genuinely believes that high tariff walls will force people who are doing manufacturing in China and all across south-east Asia and elsewhere to come here.”Galston added: “It is, most economists would say, a fantasy that could make a difference at the margins. Right now, manufacturing employment in the United States as a share of the total is 8%, down from its peak above 30% in the 1970s, and that’s not going to be reversed.”Trump had effectively taken the world economy hostage. The repercussions were immediate and widespread, including market instability, strong international condemnation, retaliatory measures from China and deep uncertainty for businesses and consumers.View image in fullscreenLarry Summers, a former treasury secretary, described it as “the biggest self-inflicted wound we’ve put on our economy in history”. Some chief executives who had backed Trump in last year’s election expressed buyer’s remorse as their fortunes sank. Tech giants such as Apple saw their stock prices drop; analysts predicted potential price increases for iPhones by as much as 43%.In the White House, Trump’s closest advisers were rattled. Elon Musk, the world’s richest man, engaged in a highly public and insulting feud with Trump’s trade adviser Peter Navarro over the impact of tariffs on Tesla, calling Navarro a “moron” and “dumber than a sack of bricks”.Trump insisted he was right and elite opinion was wrong. As he blithely golfed over the weekend, even as markets crashed and haemorrhaged trillions of dollars, the treasury secretary, Scott Bessent, flew to Trump’s Mar-a-Lago estate in Florida to plea for a strategy that could include improved trade deals with foreign countries.Republicans were anxious as they heard the complaints of constituents worried about retirement savings. Some spoke out or considered legislation to curb Trump’s tariffs power. Senator Ted Cruz, a staunch Trump supporter, warned: “Tariffs are a tax on consumers, and I’m not a fan of jacking up taxes on American consumers.”It was a notable break from a party long criticised for a sycophantic, cultish devotion to Trump on all other issues. James Bennet, a columnist for the Economist magazine, told the Guardian’s Politics Weekly America podcast: “There are limits to how far Donald Trump can go and it is conceivable that Republicans could rise up against him.skip past newsletter promotionafter newsletter promotion“They haven’t been willing to do it as Donald Trump has embarked on this campaign of retribution, using the justice department to punish his foes. They haven’t been willing to do it over speech issues or the deportation of completely innocent people to a prison in El Salvador. But these tariffs were a step too far for them and that’s a signal that there is the possibility of Republican resistance at some point to this administration, which is the only thing that can really restrain it.”The mounting pressure from Republicans, business leaders and financial markets stoked fears of a recession that could even tip into a depression. Finally, Trump yielded and, on Wednesday, announced a 90-day pause for most countries while inviting them to negotiate bilateral trade deals.Antjuan Seawright, a Democratic strategist, said: “He saw the pressure from not only the American people but he saw people from within his own ecosystem screaming and yelling about how bad this was. Donald Trump has a history of caving because he is a paper tiger leader in many ways and this was just further proof of that. He wants to play hardball but with a soft bat.”White House aides argued otherwise, deploying the Trump playbook learned from his lawyer Roy Cohn: always claim victory and never admit defeat. Stephen Miller, White House deputy chief of staff, tweeted: “You have been watching the greatest economic master strategy from an American president in history.”But the president himself admitted that he had been monitoring the bond market and people were “getting a little queasy” as bond prices had fallen and interest rates increased. He said: “People were jumping a little bit out of line. They were getting yippy.”Even Trump, whose second term has been characterised by audacity, impunity and brazen lies, had reached the capacity of his reality distortion field and its amplification by rightwing media. The cold facts of the market were not to be denied.Kurt Bardella, a strategic communications adviser, said: “We’re seeing now, for the first time in Trump 2, the limitations of propaganda, of drinking your own Kool-Aid. There are economic realities, market realities that are larger than the lie that they tell themselves and the American people over and over again. Their attempt to try to sell that lie to the world clearly did not work.“He can go out there all day long till he’s blue in the face and say to friendly media and his Maga puppets [that] we’re being ripped off and this will lead to the greatest economic boom we’ve ever seen – but no one else is believing it. The private sector that he has propped himself up on for so long completely rejected all of this.”Bardella, a former congressional aide, added: “For all the ‘Let’s run the government like a business’ crowd, if any business ran themselves this way there would be a vote of no confidence and that CEO would be ousted that very day for deliberately tanking that company’s own stock.”After an initial surge, the markets dipped again. While the pause has offered a temporary reprieve, a 10% blanket duty on almost all US imports remains in effect. Karoline Leavitt, the White House press secretary, claimed on Friday that more than 75 countries have contacted the Trump administration with a view to addressing trade issues. “The phones have been ringing off the hook to make deals,” she said.But it remains uncertain whether the US will be able to secure significant concessions from other countries within 90 days. The mercurial nature of Trump’s decision-making on the on-again, off-again levies could add to the whiplash while eroding faith in the US and the reliability of the dollar.And the trade war with China continues to escalate, posing a significant threat to the global economy. Trump raised tariffs on China to 145%, prompting retaliation. US consumers are likely to feel the pain from price hikes on clothing and other products. China also threatened further non-tariff measures, such as blacklisting US companies and restricting exports of rare earth minerals.Larry Sabato, director of the Center for Politics at the University of Virginia, said: “It’s not over at all. The worst part is probably ahead because of China. Is he going to work out a deal with all these other countries? Get real. He has scrambled everything and America is no longer trusted in any sphere now – defence, international relations, economics. It’s sad.” More

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      China raises tariffs on US goods to 125% as Xi urges EU to resist Trump ‘bullying’

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      China has raised its tariffs on US products to 125% in the latest salvo of the trade dispute with Washington, just hours after Xi Jinping said there were “no winners in a tariff war”.Xi made the comments during a meeting with the Spanish prime minister in which he invited the EU to work with China to resist “bullying”, part of an apparent campaign to shore up other trading partners.The Chinese commerce ministry announced on Friday that it was raising the 84% tariffs on all US imports to 125%, again saying that China was ready to “fight to the end”. The statement also suggested it may be Beijing’s last move in the tit-for-tat tariff raises as “at the current tariff level, there is no market acceptance for US goods exported to China”.“If the US continues to impose tariffs on Chinese goods exported to the US, China will ignore it,” it said, flagging that there were other countermeasures to come.Some markets continued to tumble on Friday, as the French president, Emmanuel Macron, described the US president’s 90-day tariff pause – which sets most tariffs at 10% until July – as “fragile”.Asian indices followed Wall Street lower on Friday, with Japan’s Nikkei down nearly 5% and Hong Kong stocks heading towards the biggest weekly decline since 2008. Oil prices were also expected to drop for a second consecutive week.Chinese officials have been canvassing other trading partners about how to deal with the US tariffs, after the country was excluded from Trump’s 90-day pause of the steepest global tariffs. Instead the US president made consecutive increases to duties on Chinese imports, which are now 145%.On Friday, Xi welcomed Spain’s Pedro Sánchez, after also talking to counterparts in Saudi Arabia and South Africa. According to the official Chinese summary of the talks, Xi said “there will be no winners in a tariff war, and going against the world will isolate oneself”, in an apparent reference to the US.“China and the EU should fulfil their international responsibilities, jointly maintain the trend of economic globalisation and the international trade environment, and jointly resist unilateral bullying, not only to safeguard their own legitimate rights and interests, but also to safeguard international fairness and justice, and to safeguard international rules and order,” the summary said Xi told Sánchez.Spain said Sánchez told Xi his country favoured a more balanced relationship between the EU and China based on negotiations to resolve differences and cooperation in areas of common interest.Xi plans to travel to south-east Asia, including Vietnam and Cambodia, next week.Macron wrote on X early on Friday that Trump’s partial tariff suspension, pausing new rates on various countries that would have risen as high as 50%, “sends out a signal and leaves the door open for talks. But this pause is a fragile one.”He added: “This 90-day pause means 90 days of uncertainty for all our businesses, on both sides of the Atlantic and beyond.”Battered financial markets were given a brief reprieve on Wednesday when Trump decided to pause duties on dozens of countries. However, his escalating trade dispute with China, the world’s second-largest economy, has continued to fuel fears of recession and further retaliation.The US treasury secretary, Scott Bessent, tried to assuage the fears of sceptics by telling a cabinet meeting on Thursday that more than 75 countries wanted to start trade negotiations, and Trump had expressed hope of a deal with China.But the uncertainty in the meantime extended some of the most volatile trading since the early days of the Covid-19 pandemic.The US’s S&P 500 index ended 3.5% lower on Thursday and was now down about 15% from its all-time peak in February. Some analysts believe stocks have further to fall owing to the uncertainty surrounding the US tariff policy.Bessent shrugged off the renewed market sell-off on Thursday and predicted that striking deals with other countries would bring more certainty.The US and Vietnam agreed to begin formal trade talks after Bessent spoke to the Vietnamese deputy prime minister, Ho Duc Phoc, the White House said.The south-east Asian manufacturing hub is prepared to crack down on Chinese goods being shipped to the US via its territory in the hope of avoiding tariffs, Reuters reported on Friday.Taiwan’s president said his government would also be among the first batch of trading partners to enter negotiations. Taiwan, listed for a 32% tariff, has offered zero tariffs as a basis for talks.Japan’s prime minister, Shigeru Ishiba, meanwhile, has set up a taskforce led by his close aide that hopes to visit Washington next week, according to local media.View image in fullscreenWhile Trump suddenly paused his “reciprocal” tariffs on other countries hours after they came into effect this week, he did not include China, instead increasing duties on Chinese imports as punishment for Beijing’s initial move to retaliate.Trump had imposed tariffs on Chinese goods of 145% since taking office, a White House official said.Meanwhile, Trump told reporters at the White House he thought the US could make a deal with China, but he reiterated his argument that Beijing had “really taken advantage” of the US for a long time.“I’m sure that we’ll be able to get along very well,” the US president said, referring to Xi. “In a true sense, he’s been a friend of mine for a long period of time, and I think that we’ll end up working out something that’s very good for both countries.”Xi and Trump are not known to have spoken since before Trump’s inauguration. Beijing has said it has no intention of backing down to what it terms as Trump’s “bullying” with the tariffs.“We will never sit idly by and watch while the legitimate rights and interests of the Chinese people are infringed, nor will we sit idly by as international economic and trade rules and the multilateral trading system are undermined,” the Chinese foreign ministry spokesperson, Lin Jian, said on Thursday.As well as retaliatory tariffs, Beijing has also restricted imports of Hollywood films, and put 18 US companies on trade restriction lists.The commerce ministry said China’s door was open to dialogue but this must be based on mutual respect.The US tariff pause also does not apply to duties paid by Canada and Mexico, whose goods are still subject to 25% fentanyl-related tariffs unless they comply with the US-Mexico-Canada trade agreement’s rules of origin.With trade hostilities persisting among the top three US trade partners, Goldman Sachs estimates the probability of a recession at 45%.Even with the rollback, the overall average import duty rate imposed by the US is the highest in more than a century, according to Yale University researchers.It also did little to soothe business leaders’ worries about the fallout from Trump’s trade dispute and its chaotic implementation: soaring costs, falling orders and snarled supply chains.One reprieve came, however, when the EU said it would pause its first counter-tariffs. 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