In a stunning turn of events, ex-US president Donald Trump said on Wednesday that he will pause his extreme tariffs for 90 days. This means no new trade restrictions will be added on any countries. With this pause, there is a drastic change in tariff policies where every country aside from China, which incurs harsher penalties, will now receive a baseline tariff of 10%.
In a statement made over Truth Social, Trump boasted that he is setting the level of respect for world economy with China, and thus, decided to impose an outrageous 125% tariff on Chinese goods, which will come into effect immediately. This shift hikes the already high level of trade stress between both nations that are the largest economies in the world.
“Due to the lack of respect that China has shown to the World’s Markets, I am hereby raising the Tariff charged to China by the United States of America to 125%, effective immediately,” Trump wrote on social media, portraying his administration’s uncompromising view on China’s tariffs like policies.
The global economy is currently under a lot of stress due to ongoing geopolitical issues, recovering from COVID-19, and volatile commodity prices. Given this context, the decision to suspend the tariffs for the majority of countries does not come as a surprise. With the new tariffs and especially the extreme intensification with China, it is bound to affect global supply chains, trading systems, and market prices around the world.
A sharp and unexpected change from Trump can be viewed as additional pressure on the already tight and complicated U.S. China trade relations. These changes will undoubtedly stall finding an easy solution to the thorny trade war. Various firms and policymakers are bound to look and see what sort of impact the new tariffs bring to global trading, whilst also looking at the economy.
The evolving environment in global trading shifts will culminate as a response to novel trade policies, and so monitoring these markets will be valuable to understand the orbiting tariff situation.
