Stock markets soared again as fears of a trade war were temporarily quelled, but experts said there would be “no return to normal” any time soon.
But unanswered questions remain as to how Trump’s global economic chaos and escalation of a trade war between the world’s biggest economies will end as financial markets continue to trade with little stability.
Trump at the cabinet meeting after announcing the pause in tariffs ( Photo: Nathan Howard/ Reuters)
“We don’t know whether this is just a pause, and in 90 days these tariffs will be introduced again or whether it means that the tariffs above the 10 per cent level will never be coming back,” he explained.
One “definitely possible” outcome is that the US tariff assault does not return after the 90-day pause, Sampson said. This may involve a permanent continuation of the 10 per cent baseline levy for all imports into the US, or a different reduced rate not at the same height as previously announced.
A trader works on the floor of the New York Stock Exchange (NYSE) at the opening bell on the day Trump paused his tariff regime (Photo: Timothy A Clary/AFP)
Trillions of dollars have been wiped from stock markets since Trump’s announcement last week while US government bond yields surged.
Trump indicated that the panic in markets had factored into his thinking. “You have to be flexible,” he told reporters.
Davidson, however, said it would be a “pretty unlikely scenario” for Trump to drop his tariff agenda and “something quite big would have to change to get there”.
Hefty tariffs are reinstated
“What happens at the end of these 90 days is highly unpredictable,” Davidson said, including whether Trump’s tariff agenda is reinstated in some form after the 90-day pause.
“What the administration’s appetite for risk might be after 90 days, who the hell knows? They don’t even know yet.”
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