Businesses and financial markets are still facing “a massive amount of uncertainty” after Donald Trump’s spectacular pause in his tariff assault on trading partners, economists have told The i Paper.
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.
The US President said on Wednesday that a “baseline” 10 per cent tariff would fall into place for most countries, but ratcheted up the levy on Chinese imports to 145 per cent, prompting Beijing to retaliate on Friday with 125 per cent tariffs.
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.
“I wouldn’t want to rule anything out,” Thomas Sampson, associate professor of economics at the London School of Economics, told The i Paper.
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.
“Trump is a kind of agent of chaos,” Denzil Davidson, a trade expert and director at Global Counsel, said. “He likes drama and he can’t be trusted. So whatever happens, everyone’s perceptions of the US have already changed.”
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.
He suggested the pause was a “signal” that the White House was “to some extent spooked by the stock price declines, and the kind of volatility in the financial markets”.
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.
Jamie Dimon, the JP Morgan Chase chief executive, said on Wednesday that a recession was a probable outcome of the tariffs. Goldman Sachs, meanwhile, increased the possibility of a recession in the next year to 45 per cent – up from 35 per cent predicted at the end of March.
Trump indicated that the panic in markets had factored into his thinking. “You have to be flexible,” he told reporters.
Even if 10 per cent “baseline” tariffs continue beyond 90 days, Sampson said trading “won’t return to normal” because there remains “a big hike in tariff levels that is going to lead to a reduction in trade with the US”.
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”.
“No one is going to be sitting back and relaxing and saying, ‘everything’s fine now’,” he explained. “Unless things change to a different pattern of behaviour over some time, there will continue to be a deep lack of trust.”
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.
“All the tariffs being gone seems like the less likely outcome,” he continued. “But the big new fact we learned was that Trump does actually pay attention to the financial markets and the economy, and he doesn’t want them to crash.
“What the administration’s appetite for risk might be after 90 days, who the hell knows? They don’t even know yet.”
Read More Details
Finally We wish PressBee provided you with enough information of ( How Trump’s tariff chaos could end, according to economists )
Also on site :
- Country Star Reveals He Soiled Himself Onstage in Major 'TMI' Moment
- 'Fire Country' Star Stephanie Arcila Goes Inside Gabriela’s Stalker Storyline (Exclusive)
- Red Sox Expected To Activate Liam Hendriks Tomorrow