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      Trump was playing chicken with tariffs. Then he chickened out | Steven Greenhouse

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      By imposing punitively high tariffs, Donald Trump was playing a high-stakes game of chicken with the US’s trading partners – but it was Trump who chickened out and suspended his tariffs just hours after they took effect. The president couldn’t ignore the worldwide economic havoc that he had caused singled-handedly – stock markets were plunging, business executives were panicking and consumers were seething.Eager to persuade manufacturers to build new plants in the US, Trump said on Monday that many of his tariffs would be permanent. But for Trump, permanent evidently meant two days.Once again, Trump showed that his second term is one of fiat, flub and flip-flop, of bluster and blunder, of shooting first and aiming later. It’s also a mix of cutting, gutting and cruelty.And foolery. Trump’s tariffs are worse than, as the Wall Street Journal put it, the “dumbest trade war in history”: they are the dumbest economic policy that any US president has ever adopted. His tariffs quickly caused vast and totally unnecessary damage to stock markets, industries and diplomatic relations across the globe. Before Trump unexpectedly suspended the tariffs, US stock markets had lost more than $10tn in value, and stock markets overseas plummeted, too. Millions of retirees had seen their 401(k)s plunge in value, consumers were facing substantially higher prices and many workers were already losing their jobs as Trump’s tariffs sent shockwaves through the global economy.Trump’s embarrassing climbdown on tariffs was one of the rare times he bowed to common sense. If only he would do the same when it comes to his dangerously myopic cuts to scientific research, environmental protection and foreign aid.Trump has not climbed down, however, in his showdown with China. In a fit of pique over China’s retaliatory tariffs, Trump has imposed stratospheric 145% tariffs on China. Attention Walmart shoppers: that is going to more than double the price of many things you buy.When it came to tariffs, Trump made some basic political fumbles. Not only did he go golfing and speak at a million-dollar-a-head fundraiser as this economic disaster unfolded, but he failed to give a coherent explanation for his screw-everyone-else tariffs. Trump and his team pointed to a potpourri of often-conflicting goals: to erase trade deficits, to collect trillions of dollars for the treasury, to bring back manufacturing jobs, to give Trump negotiating leverage to crack down on fentanyl and immigration and reduce other countries’ tariffs.Let’s not delude ourselves. There are two main reasons for Trump’s tariffs: first, to satisfy his never-ending thirst for vengeance against those he feels have wronged him (which seems to mean every country in the world except Russia) and second, to fulfill his desire to wield a club over everyone and everything. By using staggeringly high tariffs as a weapon, Trump has been acting like a mob enforcer, telling every business in town: I’m going to clobber you with my baseball bat unless you do what I want.There’s another reason for Trump’s tariffs: his ignorance about how the world’s economy works. Trump’s “liberation day” speech on tariffs gave the looney, but unmistakable, impression that he believes that Vietnam, for instance, is looting and pillaging the US by selling more sneakers and other goods to the US than the US sells to Vietnam. Trump thinks this even though millions of Americans are delighted to buy well-made sneakers from Vietnam (which would cost consumers far more if they were made in the US).With his grievance-driven, zero-sum worldview, Trump no doubt believes that other countries are unfairly taking advantage of the US whenever we trade with them – and he wants to get even.Trump thinks that trade deficits are evil. If Trump had taken a class with Robert Solow, a Nobel Prize-winning economist at MIT, he might have heard Solow’s wisdom about why there’s no big worry about bilateral trade deficits: “I have a chronic deficit with my barber, who doesn’t buy a darned thing from me.”That Trump got to impose his calamitous tariffs at 12.01am on Wednesday reflects the dismal quality of his cabinet and advisers. Too many are lackeys who automatically cheer whatever he does, while some others, like the treasury secretary, Scott Bessent, no doubt realized that his tariffs were dumb and disastrous, but they’re too cowardly to tell the Tariff King. The tariffs would inevitably increase inflation and probably push the US into recession. Even though Republicans have vowed never to raise taxes, Trump’s tariffs are unarguably a tax, a regressive tax and the largest tax increase in 60 years. Trump’s tariffs were bound to destroy smoothly running supply chains and hurt untold numbers of US companies. They were also a disaster for relations with our allies. They were already triggering massive retaliation.If Trump had some smart, principled advisers, they might explain to him that many obstacles might prevent his tariffs from achieving their goals. With the nation’s low 4% unemployment rate, it will be hard to find workers to do the manufacturing jobs that Trump wants to bring back, especially when he’s rounding up and expelling many immigrant workers. Moreover, US corporations have largely lost the technological knowhow to compete in various industries and that complicates hopes to bring back far more factories.Then there’s another big problem – the chaotic Trump is the worst possible president to persuade companies to build factories in the US to produce goods they now obtain from abroad. King Donald the Capricious does not exactly exude the air of stability that executives insist on before they decide to make big investment decisions, like building new factories.Trump trumpeted his tariffs in part to show strength, but he ended up in an embarrassing retreat (he did maintain a 10% tariff on many countries). Trump is eager to get China to heed his wishes, but China, the world’s leading manufacturing country, can now see that Trump will back down when the heat is too great.China doesn’t have clean hands on trade. It improperly subsidizes many industries to help them outcompete manufacturers in the US and elsewhere. China also has ambitions to vastly increase its manufacturing capacity – a strategy that could kill off important industries in the US, Canada, Europe, Japan and other countries. If Trump were smart and strategic, he – instead of alienating those countries with his tariffs – would have formed an alliance with those countries to pressure China. But now those countries are too angry at the Trump to do that.Trump, never one to admit defeat, insists that his climbdown was a victory, that the mess he made was marvelous strategy. He says many countries are eager to make deals with him. “I’m telling you, these countries are calling us up, kissing my ass,” he said on Wednesday. “They are dying to make a deal.”Our allies are no doubt furious with Trump. Not only were they already angry that he stabbed Ukraine in the back and sidled up to Putin, but they’re unhappy that his tariff foolishness violated numerous international agreements and sought to blow up a smoothly running trade system. And then Trump ridicules them by saying they were rushing to kiss his behind.I hardly ever agree with Elon Musk, but he was right that Trump’s tariffs were the work of morons who were “dumber than a sack of bricks”.

      Steven Greenhouse is a journalist and author focusing on labor and the workplace, as well as economic and legal issues. 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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      The big lesson for Europe? Trump backed down under pressure | Alexander Hurst

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      My condolences to everyone who spent days trying to play 5D chess with Donald Trump’s market-exploding tariff mess. Where Trump is involved, there is a cloud of malevolent chaos, and there is grift amid the chaos. What grandmasters there are to be found are almost certainly grandmasters of grift.When markets dump $10tn in three days and then gain trillions back in a single afternoon on the erratic decisions of one deeply corrupt person, you can be sure that a small number of people have made immense sums of money out of that volatility. Were the people responsible for abnormal spikes of buying into the markets (including call options on various indexes and exchange-traded funds) on Wednesday morning – and again, 20 minutes before the tariff announcement went public – extraordinarily lucky? Were they in the right Signal group? Or were they just simply following Trump on Truth Social, where he posted: “THIS IS A GREAT TIME TO BUY!!! DJT” –just a few hours before dropping the news that he was kind of pulling back.The first takeaway for the EU – beyond the potential stock tips – is that Trump will back down under pressure. So don’t grovel: the 10% universal tariff is still there, as are last month’s tariffs on steel and aluminum, so why has the EU unilaterally stepped down its retaliatory tariffs without a corresponding step-down from the US?Trump, of course, is spinning his partial U-turn as a result of “these countries … calling me, kissing my ass”, as he bragged to a gathering of congressional Republicans on Tuesday night. I have no doubt that Trump – whom hundreds of mental health professionals have described as having such a striking and serious case of malignant narcissism that they were willing to break a professional rule and diagnose him from a distance – would have loved for that to be true. But let me go out on a limb and say that it wasn’t the ass-kissing or any “deals”. It was that investors and funds the world over were fleeing anything and everything linked to the US – including its sovereign debt.There is a longstanding phenomenon whereby Europe tends to overvalue the US’s power and underestimate its own. Europe neither “kissed ass” nor retaliated over the “liberation day” tariffs; it observed as the market carnage and threat to US Treasury bonds punched a hole in the idea of the US as impregnable. Imagine how much faster the flood away from the US and to safety elsewhere (including the euro) would have been if the EU hadimmediately used its so-called bazooka, the anti-coercion instrument – a powerful new regulation that would allow it to target US services industries such as banking and tech.The second takeaway is that the rest of the world is ready to bypass the US’s chaos and unpredictability – it just needs Europe to be the alternative. What Trump also does not understand is that the US may have a trade deficit, but it was a net exporter of trust – until it blew up an interlocking economic and security order that it had designed, built and maintained over eight decades – and of which it was the primary beneficiary. As a result, the view from Brussels now is that “there is no long-term credibility” with the US, Claus Vistesen, of Pantheon Macroeconomics, told me.Europe, on the other hand, plays by the rules. In the long run the more dents Trump pounds into the rule of law and the idea that the US is stable, rather than erratic, the stronger the euro’s argument for replacing the dollar as the world’s reserve currency. Which brings me to the third takeaway.In the face of the Trump administration’s very real animosity towards it, the EU must act as swiftly as possible to shore up its greatest weakness: its dependence on fossil-fuel imports. Sometimes, the animosity is almost laughably tragicomic, such as when US commerce secretary Howard Lutnick ranted that Europeans “hate our beef because our beef is beautiful and theirs is weak”. Other times, it’s more transparent, such as when Trump claimed there would be no negotiations unless the Europeans “pay us a lot of money on a yearly basis, number one for present, but also for past”. As in, in Trump’s mind, $350bn in annual purchases of US natural gas in exchange for lifting tariffs.Over the past few months, the refrain that governments should weaken climate regulation in order to promote growth has picked up. This would be a truly pyrrhic victory – primarily because Europe is acutely vulnerable to climate breakdown, the human and financial costs of which are staggeringly worse at every half-degree of heating, but also because the EU’s dependence on imported fossil fuels – from Russia, or from the US – is a glaring strategic and economic weakness. In fact, the grand irony of Trump’s pro-fossil fuel agenda is that he has exploded the green re-industrialisation that actually was taking place, thanks to Joe Biden’s Inflation Reduction Act, leaving the door wide open for someone else.So, to paraphrase the tech bros, if Trump is going to move fast and break things, then let’s move fast and build things.“Europe can turn this into a window of opportunity to further its edge with the US on clean tech,” says Simone Tagliapietra of the Brussels thinktank Bruegel. He advocates for a decarbonisation bank, completing the single market as urged by Mario Draghi, and issuing new eurobonds.The mantra going forward should be “whatever it takes” to fully replace fossil fuels with renewables – designed in Europe, built in Europe – so that it never spends $350bn to import gas from the US, Russia, or anywhere else.

      Alexander Hurst is a Guardian Europe correspondent More

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      After losing homes and businesses, LA wildfire victims face a hurdle to rebuilding: Trump’s tariffs

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      Cory Singer, co-owner of the homebuilding firm Dolan Design & Build, raced to start construction as quickly as possible in the wake of the Los Angeles wildfires. He was determined to stay ahead of the demand surge he saw coming and eager to help his clients begin to rebuild their lives.The firm broke ground in the Pacific Palisades on Saturday – one of the first companies to do so.But by that time, Singer had a new crisis to contend with: tariffs.Singer, whose firm is currently working on 10 homes in the Palisades, is in talks with clients to place shipping containers on their burned lots and store construction materials there, allowing him to order and stockpile materials in bulk before tariff price increases hit the market.“I’m definitely nervous,” he said.The Trump administration announced, walked back, and continually modified tariff policies in recent weeks, throwing the global stock market into chaos. The tariffs are widely expected to substantially increase construction costs in California and across the country.Singer is already dealing with tariff-related price hikes. One of his tile vendors placed a tariff surcharge on an order on 2 April, the same day the Trump administration announced sweeping tariffs, even though the materials had already been imported. Singer is especially worried about materials like plumbing, tiles and fixtures, which are often imported from China, and he is advising clients to factor in a 10% contingency to their budgets in anticipation of the costs.“If you don’t spend it, great,” he said, “but at least mentally prepare.”Three months after the worst wildfires in Los Angeles’s recent history flattened miles of city blocks and killed 30 people, signs of life are emerging. Insurance payouts have begun arriving. Contractors have plastered streets in Altadena and the Palisades with flyers and signs advertising their services. The Army Corps of Engineers is slowly clearing and flattening lots, replacing the charred and toxic mess of cars, washing machines and chimneys with the blank canvases of empty lots.View image in fullscreenBut homeowners, contractors, architects and developers across fire-ravaged Los Angeles are girding themselves for the tariffs. For homeowners seeking to rebuild, the tariffs add a new layer of stress to the uncertainties of navigating insurance, mortgages, short-term housing and piecing together plans for the future.The Trump administration is currently levying a 10% tariff on most countries, a 25% tariff on steel, aluminum and cars and car parts, and a massive 125% tariff on Chinese goods. The administration on Wednesday retreated on further planned global hikes after news of the tariffs prompted trillions in stock market losses worldwide, but Angelenos remain uncertain about what this means for their homes and plans.In Altadena, a middle-class neighborhood with fewer resources than the wealthy Palisades, the strain is especially acute. Homeowners worry tariffs will hinder their ability to afford rebuilding and exacerbate already widespread issues with underinsurance.“It’s really scary,” said Ken Yapkowitz, a longtime Altadena resident who lost his home and two rental income properties in the Eaton fire.Yapkowitz is waiting to see what his final insurance payouts will be and starting to map out how to rebuild his properties. He had already been factoring in a 25% bump in materials costs before the tariffs were announced, he said, and figured there would be a surge in demand for materials and labor. He expects tariffs to add substantial costs, and wonders if he will be able to rebuild on his lots as planned.Jose Flores, owner of JV Builders & Development, a small business in Pasadena, said many of his Altadena clients want to rebuild. But he worries that tariffs, paired with a painfully slow permitting process and other skyrocketing costs, will cause them to change their minds. He has three clients in the process of drawing up plans with architects, but many others have called him for estimates only to disappear.“By the time people are ready to start construction, I believe the prices are going to be higher,” he said. Flores has noticed the prices of lumber, copper and roofing tick up in recent months. But he can’t afford to stockpile materials, he said, and has no place to store them even if he could. He has no choice but to wait and see what happens.“I think that’s the case for most of us contractors in the area,” Flores said.Following the tariffs’ announcement, the California governor, Gavin Newsom, asked his administration to pursue independent trade relationships with other countries and to explore ways to protect access to construction materials in the wake of the California wildfires. But he did not specify what measures the state could deploy to do that.Flores, the contractor, said he doubted that the governor’s office could actually rein in prices.Newsom’s office did not respond to a request for comment.‘We just don’t know right now’Some residents and business owners are already seeing the tariffs affect wildfire response. Brett Taylor, an Altadena resident who owns a local window and door supplier and who lost his home in the Eaton fire, said his suppliers mostly manufacture domestically, but that many of them source parts from abroad. In late March, he reached out to approximately 10 window vendors to ask whether they would be open to providing package discounts to fire victims. Almost all of them said yes.But before the deals could be finalized, the administration announced tariffs. At least one of Taylor’s vendors walked back their commitment, citing price uncertainty, and Taylor anticipates others will do the same in coming days.View image in fullscreenOthers are tapping personal connections and devising makeshift plans to try to defray costs. James Peddie, an Altadena realtor who lost his home, has been helping develop plans for a group of homeowners hoping to rebuild collectively. He knows from his years in construction that a substantial portion of southern California’s lumber is imported from Canada, and when tariffs were announced, he understood that meant increased costs.Peddie went to high school in Montana, and has friends in the lumber industry there. He also knows a builder who personally went to Oregon to source lumber when prices soared during the rebuilding of Paradise, California, after the devastating 2018 Camp fire.So he called up his high school friends with a question: can you help me source lumber for LA?They were eager to help. They promised to keep their commissions low and to keep him updated on price fluctuations. “They’re people I can trust,” he said. “We can probably get the lumber for a really good deal.”This shift – from purchasing overseas to domestically – is exactly what the administration hopes the tariffs will prompt.But with the rebuilding process still in its earliest phases, and plans and permits far from finalized and approved, it felt premature to put a deposit down and commit to the lumber, Peddie said. Doing so would mean needing to find and pay for long-term storage, as well as betting that the cost of lumber was only going to increase.“Where is it going to be stored? Is it going to be more expensive to ship it in?” he said. “We just don’t know right now.”He estimated it would be seven months before he would be ready to order. It’s anyone’s guess what the tariff landscape – and market – would look like by then. More

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      US stocks fall again after rally following Trump’s shock retreat on tariffs

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      US stocks fell again on Thursday after a historic rally following Donald Trump’s shock retreat on Wednesday on the hefty tariffs he had just imposed on dozens of countries.The falls came as the president blamed “transition problems” for the market reaction and the sell-off deepened after a White House clarification noted that total tariffs on China had been raised by 145% since Trump took office.Speaking at the White House, Trump said: “We think we’re in very good shape. We think we’re doing very well. Again there will be a transition cost, transition problems, but in the end it’s going to be a beautiful thing.”The sell-off comes as Democrats continue to react with anger over the sudden retreat that rattled markets, while Republicans praised Trump’s “art of the deal” in action, referencing Trump’s 1987 book.By the end of Thursday, the Dow was down 2.5% after soaring on Wednesday afternoon. The Nasdaq Composite was down more than 4%, after posting its biggest gain in more than two decades on Wednesday, and the S&P 500 down 3.4%.The market seems to be in a state of fatigue after a rollercoaster week. Stocks were even unresponsive to news on Thursday morning that the European Union announced it will suspend 25% retaliatory tariffs against US imports and new data showed inflation in the US cooled to 2.4% in March – both would typically be cause for optimism on Wall Street.On CNN, former US treasury secretary Janet Yellen called Trump’s economic policies the “worst self-inflicted wound” an administration had ever imposed on a “well-functioning economy”.Trump said in an abrupt announcement on Wednesday that he would be implementing a 90-day pause on his tariff plan, and that goods entering the US from most countries would now face a 10% blanket tariff until July, except for Chinese exports, which he said would face tariffs totaling 145% effective immediately – 125% in “reciprocal” tariffs plus 20% already imposed for China’s alleged role in the fentanyl crisis.Republican lawmakers praised the decision to pause the tariffs, with the House speaker, Mike Johnson, stating on social media: “Behold the ‘Art of the Deal.’ President Trump has created leverage, brought MANY countries to the table, and will deliver for American workers, American manufacturers, and America’s future!”Before the pause was announced, a small but growing number of Republican lawmakers and Trump supporters in the business world expressed concerns about the risks of the president’s tariff policy.By Wednesday afternoon, many were praising Trump for the rollback as part of a purported strategy.Bill Ackman, a billionaire hedge fund manager and Trump supporter who advocated for Trump to pause his trade war over the weekend, reacted to the announcement saying that “this was brilliantly executed by @realDonaldTrump. Textbook, Art of the Deal.”The benefit of Trump’s approach, Ackman claimed, “is that we now understand who are our preferred trading partners, and who the problems are. China has shown themselves to be a bad actor. Our counterparties also have a taste of what life is like if they don’t take down their trade barriers. This is the perfect set-up for trade negotiations over the next 90 days.”But some industry leaders criticized the administration’s back-and-forth and tariff decisions.On Thursday, Amazon’s CEO, Andy Jassy, said the company was still waiting to see the impact of the tariffs but warned third-party sellers may “pass that cost on” to consumers.“The effective tariff rate is actually HIGHER with the pause than it was as announced on April 2, due to the tariffs on China,” Diane Swonk, the chief economist of the professional services firm KPMG, wrote on social media. “There will be some diversion through connector countries. However, the effective tariff rate now peaks at 30.5% during the pause. That is worse than our worst case scenarios.”skip past newsletter promotionafter newsletter promotionWhile Republicans and White House officials praised Trump’s decisions, Democratic lawmakers such as Senator Chuck Schumer pushed back. Schumer told his supporters that “this chaos is all a game to Donald Trump”.“He thinks he’s playing Red Light, Green Light with the economy,” Schumer said. “But it is very real for American families.”Some Democrats have made accusations of possible market manipulation.“These constant gyrations in policy provide dangerous opportunities for insider trading,” Senator Adam Schiff said. “Who in the administration knew about Trump’s latest tariff flip-flop ahead of time? Did anyone buy or sell stocks, and profit at the public’s expense? I’m writing to the White House – the public has a right to know.”The New York representative Alexandria Ocasio-Cortez echoed similar concerns, urging any member of Congress who purchased stocks over the last two days to disclose that.“I’ve been hearing some interesting chatter on the floor,” she said. “Disclosure deadline is May 15th. We’re about to learn a few things. It’s time to ban insider trading in Congress.”The Democratic House whip, Katherine Clark, wrote: “Two hours before announcing his tariff pause, Trump told his paid Truth Social subscribers it was ‘a great time to buy’ on the stock market. Corruption is the name of their game.”The Nevada representative Steven Horsford questioned the US trade representative, Jamieson Greer, asking the representative during a committee hearing whether the climbdown was market manipulation.“How is this not market manipulation?” Horsford asked, to which Greer responded: “No.”“If it was always a plan, how is this not market manipulation?” Horsford asked again.“Tariffs are a tool, they can be used in the appropriate way to protect US jobs and small businesses, but that’s not what this does,” Horsford said. “So if it’s not market manipulation, what is it? Who’s benefiting? What billionaire just got richer?” More

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      The Guardian view on the tariff war pause: the Trump trade shambles is not over | Editorial

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      It was Donald Trump who blinked first. Never forget that. China is unlikely to overlook its importance. A week after launching an all-out global trade war, the US president paused significant parts of it for 90 days. Having insisted that he would stick with the random tariffs he imposed on most trading nations, Mr Trump suddenly decreed that he would reduce most of them to 10%. It was a major humiliation.Yet 10% is still a significant tariff to bear for nations exporting to the US. This is also only a pause until July, not a withdrawal, so the uncertainty remains. And huge tariffs still remain on China (now hiked to 145%), Canada and Mexico (both 25%), as well as on all US imports of steel, aluminium and cars (also 25%). Mr Trump is now substituting a US-world conflict with a US-China one. The two largest economies in the world – which between them have generated around half of global economic growth in the 21st century – are, in effect, no longer doing business with each other.Even so, this was a necessary step back from the cliff edge. It was enough to trigger a temporary bounceback on stock markets around the globe, though prices slipped back on Thursday and remain much lower than at the start of April. In the week since Mr Trump’s absurd “liberation day”, more than $6tn dollars of value was wiped from stocks on the S&P 500 index. It is a shameful outcome.Mr Trump claims he made the move because more than 75 nations had been willing to negotiate or “kiss my ass”. This is nonsense. He has got nothing out of the tariff war. He has not won. No one has negotiated. Mr Trump is making his usual efforts to claim yet another triumph. The plain truth is that he backed down because he was forced to.That Mr Trump can retreat is good news, as far as it goes. Overall, however, the past week has been an indictment of the president, his policies, his instincts and his behaviour. The pause should on no account be seen as proof that rational business can be done with him. For one thing, this week’s mayhem may easily kick off again as July nears. The White House has merely given itself more time to make some very big calls.Two things appear pivotal in the decision announced on Wednesday. The first was the overheating of the US bond market, subverting the established assumption that dollar bonds will always be a safe asset, and drawing the Federal Reserve to the threshold of intervention. A similar crisis doomed Liz Truss’s economic strategy in the UK in 2022, but the destructive potential of a US bond crisis is far greater. Mr Trump’s tariffs were threatening all-out recession.The second factor was some limited elite domestic pushback. Anxious senators appeared on Fox News (which the president watches) and pressed the case for dialling down. The head of JPMorgan Chase warned about recession. So did a handful of world leaders and some Trump cabinet members in telephone calls.These realities were a brake on Mr Trump this time. It is possible the trauma has left its mark and there will now be no repeat. But there is no case for confidence, let alone for accepting that this outcome had been schemed all along. Even Mr Trump admitted that Americans were “getting yippy”. They had every right to be. So did the markets, along with the rest of the world. Trust disappeared long ago, replaced now by uncertainty. There is no way that this is over. More

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      Whatever Donald Trump does next, this chaos will soon be shaping ordinary lives for the worse | Gaby Hinsliff

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      If it’s brown, lie down. If it’s black, fight back. If it’s white, say goodnight.The rhyme we learned hiking as a family through Yellowstone national park last summer is meant as a cheery reminder of how not to get eaten, if you meet a bear. Brown bears are best appeased by playing dead; black bears need to know this will hurt them more than it hurts you; and luckily there aren’t any polar bears in Yellowstone, because nothing deters them.Until this week the world remained unsure what kind of bear Donald Trump was. Keir Starmer treated him like a brown bear, dropping to the floor when threatened with tariffs and offering up a trade deal. China saw a black bear, to be met with maximum aggression. Though one day we may have to contemplate the prospect of a polar bear president – one who actually means what he said about invading his neighbours – for now what we actually seem to be facing is a crazy bear. There’s no discernible strategy or pattern here: just untrammelled ego, dragging the global financial system to the brink of meltdown and vaporising his own supporters’ retirement savings for no obvious reason beyond the pleasure of seeing impoverished allies desperately “kissing my ass”. And though this bear has lumbered back into the woods for now, seemingly spooked by a concerted revolt in the bond markets, the damage is done.What is still for the cheerfully news-avoidant just a faintly incomprehensible story about rising and plummeting stock markets will, in coming weeks, start shaping everyday lives for the worse. British businesses who have barely been able to work out if they’re coming or going for the last few weeks will pause big decisions while they try to calculate their losses. Our car and steel industries still face job-destroying higher tariffs, while Trump has talked ominously of new tariffs on pharmaceuticals to come (British drug companies rely heavily on US export markets). Along with all countries that did not retaliate against Trump, we remain saddled with a random 10% tariff on all exports, which could presumably still change on a whim. And if the US keeps up its self-harming tariff on China – now an eye-watering 145%, according to the White House, which is adding Wednesday’s 125% to the pre-existing 20% – then before long it won’t just be a case of prices rising for American shoppers but of trade between them breaking down completely, leaving American shelves empty. All this makes nervous consumers worldwide less inclined to spend and employers less likely to hire or invest, raising the risk of recessions – one reason that on Thursday, the markets fell again. There’s no security for working people in any of this, and vanishingly little prospect of growth. For a Labour government elected to deliver both, that is an existential challenge.You can either be the disrupter or the disrupted, Starmer warned his cabinet in February, rather startlingly for someone whose watchword was caution. His chief of staff, Morgan McSweeney, has however concluded that the new political divide isn’t left v right but “smash the system” v “look like the system and get smashed”. The obvious disruptive influence then was Nigel Farage’s resurgent Reform UK party, not a trade war, but one may now feed the other.Farage has gone very quiet lately about his now toxic friendship with Trump, but his local election message to England’s post-industrial heartlands is a blatantly Trumpian one about the glory days of manufacturing. This week he went to the pub with workers from British Steel’s endangered Scunthorpe plant – though it was Labour ministers who put in the unsung hours on a deal to save jobs there – before visiting a long-closed colliery to explain that he always thought the miners were betrayed. (Let’s just say that must have been an unusual view in the City, where at the time of the miners’ strike, Farage was working as a commodities trader.) It’s preposterous – Reform’s blend of tax cuts for the rich and dead-end nostalgia for everyone else would do nothing to revive former coal and steel communities – but Trump posing as the rust belt’s saviour seemed preposterous once, too. Farage knows where the electoral sweet spot is, in the seats where Reform is nipping at Labour heels: tacking right on issues such as immigration but left on economics. And while Starmer’s government is quick to compete with Reform on the former, it is more wary of the latter, even though ageing “red wall” voters now complain in focus groups of markets being rigged against them in ways that uncannily echo the disenchanted, Green-leaning southern young.But if Trump is really killing growth, meaning there will be no generous rising tide to lift public services and living standards, the only remaining options are either redistribution or accepting inexorable decline. Time, in short, to pick some enemies; to disrupt something before getting disrupted.Which markets genuinely are stacked against consumers? Who is making profits that can’t be justified? If Trump really has broken the old model, could it be built back better? This can’t mean uncosted, utopian leftwing populism but serious-minded, rigorous reforms that demonstrably put money back in ordinary pockets.What voters seem to want, the American data scientist David Shor and the writer Ezra Klein argued recently in a podcast on the confused desires underpinning American politics, is an “angry moderate”: someone who sounds as furious as they are about the state of things without seeming too frighteningly radical. There is plenty a British angry moderate could attack: from the ongoing debacle of Thames Water to the bafflingly opaque “surge pricing” now operated by everyone from concert-ticket vendors to pubs and hotels; from inequities in the tax system, or the way linking electricity prices to gas keeps them frustratingly high, to the outsourcing of social services that has left private equity firms running children’s homes and nursing homes for profit. (Not entirely alien territory to Rachel Reeves, who once told me that investigating the collapse of the outsourcing company Carillion as a backbencher changed her politics, and who has long embraced the idea of an activist state working to make life less precarious.) But whatever form it takes, offering people “shelter … from the storm”, as Starmer rightly has this week, should mean more than corporate bailouts. If not, anger with Trump could easily morph into anger with domestic governments’ inability to protect their own people from the fallout.He won’t be president for ever. But the mess he’ll leave behind, the jobs lost, the dreams smashed, the neighbourhoods spiralling downwards? That’s the polar bear, the thing that really eats governments. Fight, or say goodnight.

      Gaby Hinsliff is a Guardian columnist

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