Trump Tariff War: Tension with China, 90-day cheat for the rest of the world | What will happen next?
Donald Trump is once again creating a stir in the world’s trade circuit. This time he has announced a 90-day tariff pause, but this cheat is only for “more” countries – China is clearly not invited to this party!
Let’s understand what the whole matter is.
What are Trump’s new tariffs?
Last week, Trump announced the imposition of reciprocal tariffs on several countries around the globe. These duties ranged from 10% to 49%. India too was not spared from this impact – Trump imposed a 26% tariff on India which has now come into effect.
This step was a shock to the global markets. But the biggest drama began when a full-on trade war broke out between the US and China.
US-China Trade War: A Cheat on One Side, a War on the Other Side
Trump announced that other countries will be exempted from tariffs for 90 days as he took an “approach for dialogue”. But a tremendous tariff of 125% was imposed on China, effective immediately.
China had also imposed a tariff of up to 84% on US goods, which Trump immediately responded with a 125% tariff. And before this, China had imposed a 34% tariff, which Trump responded with a 104% tariff.
This tit-for-tat action clearly shows that both countries are in no mood to back down.
EU’s Reaction: Pause Accept, But With a Watchful Eye
The European Union had also initially imposed a 25% duty on US steel and aluminum exports. In response, the EU said that it would impose retaliatory tariffs on US goods worth $23.2 billion.
But after Trump’s 90-day pause, the EU has also put its counter-duties on hold for 90 days. Meaning, the EU-US trade line is a little calm for now.
Market Reaction: Bumper rise in Stock Markets
As soon as Trump announced a 90-day global tariff pause, US markets showed their best performance since World War II!
S&P 500 jumped 9.5%
Dow Jones Industrial Average showed a rise of almost 3,000 points
Nasdaq Composite also made a tremendous rise of 12.2%
This clearly shows that the markets took a positive signal from Trump’s decision – perhaps this pause will open the way for negotiations.
What does Trump have to say?
Trump wrote in his Truth Social post:
“Other countries have come for negotiations, but did not retaliate. But China – they lack respect. That is why they will not get any exemption.”
This statement shows that Trump is personally angry with China and wants to keep the pressure on Beijing.
Impact on India?
What will be the impact of 26% US tariff on India is still being analyzed. New Delhi authorities have said that they are assessing the impact of the situation. If it has a negative impact on India-US relations, it can create problems for long-term trade relations.
What can happen next?
The possibilities of trade deals with other countries have increased because the 90-day pause is giving them an opportunity to negotiate with Trump.
There are chances of China-US relations getting worse if this tit-for-tat becomes too aggressive.
If China is also ready for negotiations, then perhaps a new global trade framework can be created.
Conclusion: Peace or war – decision will be taken in 90 days
For now the world market has taken a little sigh of relief, but the real test will be in the next 90 days. Will the countries be able to deal with Trump? Will China also melt or will this trade war become more intense?
One thing is clear – Trump’s tariff policy is taking the world’s trade in a new direction. Now it remains to be seen whether this direction leads to prosperity or creates new conflicts.