Trump wanted everyone to ‘kiss the ring.’ Instead, he suffered a heavy defeat.
Seemingly ignoring the suffering millions of Americans and people all around the world experienced because of his insistence on slapping severe tariffs on almost every major trading partner, Trump left for Florida on Friday following a terrible week for the financial markets. Under increasing political and economic pressure, Trump had no option but to act to reduce tensions and stabilize the markets.
Trump went to social media earlier in the week, claiming that “his policies will never change,” and telling his supporters, “I know what I’m doing,” and that “sometimes you have to take medicine to fix something.” Trump, nevertheless, announced a 90-day halt on most countries’ higher trade tariffs not long after he posted these remarks; China was excluded.
Markets responded right away; as usual, circumstances changed fast and prices fluctuated dramatically from hour to hour. Moreover, even on the weekend, unexpected events surface that may significantly impact the markets when they open on Monday since uncertainty increases strain on traders, corporations, and small businesses.
The big shift
The Trump administration has announced that it will exempt various electronics, including phones, computers, and other devices, from the set of “reciprocal” tariffs previously imposed on goods imported from countries like China. According to the most recent Customs and Border Protection guidance, which oversees import duty collection, this exemption applies to roughly 20 high-demand items like smartphones, computers, routers, and semiconductors.
Consumers who had been preparing for higher costs on these essential electronics because of the high tariffs on Chinese imports will find great comfort from this action. Particularly for major technology companies like Apple, which makes a lot of its products in China and was facing potential cost hikes, this decision is good news.
The larger background stays complicated and somewhat unstable even with this relief. President Trump has said that although some industries like electronics are now excluded, he plans to apply focused tariffs on specific goods, including semiconductor chips, implying that the exemption could be restricted or fleeting for some types of products.
President Trump, though, spoke with reporters on board Air Force One on Friday night and said some hope about the continuing trade conflicts with China. He underlined his good ties with Chinese President Xi Jinping as a possible road to a diplomatic settlement.
“I think something positive is going to come out of it,” Trump stated, suggesting that despite the current challenges, there could be room for negotiation and mutual agreement that might ease the tensions and lead to more stable economic relations between the two superpowers. Global markets are still cautious and somewhat worried about the prospective consequences of these trade policies on the international economic scene.
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Behind the scene
Initially, Trump wanted for all nations affected by the tariffs to “kiss the ring” and negotiate favorable terms with the United States. Many countries fast indicated a desire to negotiate unique deals, a decision that Trump’s inner circle strongly supported.
Still, something behind the scenes seems to have changed; no official, however, has been ready to discuss it openly. With the 10-year yield briefly hitting 4.51%, market speculation and other reports indicate China may have sold off U.S. Treasury bonds this week, an action perhaps fueling a rise in Treasury yields.
Though unverified, many see this event as a key influence on the Trump administration’s decision of announcing a 90-day pause on tariff increases— action that now seems to be a major setback for Trump and his hardline tariff approach, especially in light of his prior unyielding position.
