Trump Retreats, Markets Breathe

Trump Retreats, Markets Breathe

Trump Retreats, Markets Breathe: Trump's Tariff

 Face Radical Review

Amid the trade tensions that characterize the relationship between Washington and Beijing, new indicators are emerging that suggest a possible thaw in the tariff war between the world's two largest economies.

 The Trump administration is considering reducing tariffs on Chinese imports, a move aimed at calming the tense atmosphere and easing pressure on global supply chains and financial markets. Although the decision has not yet been finalized within the White House, the tone of official statements and the positions of the relevant parties, both American and Chinese, reflect, to some extent, a desire to break the deadlock and move toward constructive dialogue.

 While investors are monitoring these developments with caution and anticipation, the world is anticipating potential outcomes that could redraw the map of global economic balances amid accelerating geopolitical and trade shifts. A Wall Street Journal report revealed on Wednesday that the Trump administration is considering reducing the exorbitant tariffs on Chinese imports—in some cases by more than half—in an attempt to ease tensions with Beijing that have disrupted global trade and investment.

The newspaper quoted two informed sources as saying that President Trump has not yet made a final decision, adding that the discussions are still unclear and that several options are on the table. A senior White House official stated that tariffs on China are likely to be reduced to approximately 50 to 65 percent.

The US administration is also considering a gradual approach similar to the one proposed by the House Committee on China late last year (imposing a 35 percent tariff on goods the US does not consider a national security threat, and at least 100 percent tariffs on goods deemed strategic to US interests), according to some sources. The bill proposed implementing these tariffs gradually over five years.

Trump announced on Tuesday his willingness to reduce tariffs on Chinese goods, confirming that the 145 percent tariffs he imposed on China would be reduced. He added, "But they will not be removed completely." This development was widely welcomed by investors who had been concerned about the White House's aggressive moves in recent weeks. China indicated on Wednesday its openness to trade talks with the United States, despite Beijing's warning that it would not negotiate under continued threats from the White House.

According to the Wall Street Journal, within Chinese decision-making circles, Trump's remarks on Tuesday were viewed as a sign of his retreat, according to sources familiar with the situation with Chinese officials.  The expressions of openness to reaching an agreement from both sides represent a shift from most of last month, when the world's two largest economies exchanged tit-for-tat tariff increases and tense rhetoric, helping push stock markets around the world to their worst week in years.

Possible De-escalation

Chinese journalist Suad Yai Xinhua says:

After Trump said the tariffs imposed on China were excessive and that he intended to reduce them, the tariff war between the two countries appears to be heading toward a de-escalation.

This potential de-escalation has implications not only for bilateral relations between the world's two largest economies but also for global markets on several levels.

She added: "If the United States decides to reduce tariffs on Chinese goods, this will directly reduce the costs of cross-border trade, helping to mitigate the disruptions to global supply chains caused by high tariffs.

 For example, the cost of Chinese electronic and mechanical products destined for the US market will decrease, easing pressure on major US companies like Tesla and Apple, which rely heavily on Chinese supply chains."

In addition, a de-escalation in the trade conflict between China and the US could contribute to increased investor confidence in international markets. China and the US are the world's two largest economies, and any trade rapprochement between them sends positive signals to the rest of the world.