This could be Trump's new circus move

Donald Trump

The danger is not over – this is what awaits now

Andreas Cervenka

Reporter and economic commentator
This is a commentary text. Analysis and positions are the writer's.

Updated 12.18 | Published 10.13

US President Donald Trump. Photo: AP

There is a reason why a bunch of seven-year-olds with "running in their legs" are not allowed to take over the control tower at Arlanda for a day.

For the world economy, lower requirements apply. But the Trump circus has barely begun. This could be his next crazy move.

"This was Donald Trump's strategy all along," US Treasury Secretary Scott Bessent explained with a sense of urgency after yesterday's announcement of suspended tariffs and new economic war measures against China.

You could almost hear the rest of the world giggling.

Absolutely, buddy. If you put it that way.

A testament to the high quality of the decision-making was that the countries affected by the announcement could not even interpret what it meant.

By all accounts, someone with normal mental abilities finally managed to get in touch with Donald Trump's brain and explain that the US was heading for a crash that would make 2008 look like a confirmation camp.

The fact that interest rates on US government bonds were skyrocketing spoke volumes. It was starting to resemble the equivalent of a bank run where customers were leaving in panic. Nothing that a country with a national debt of 120 percent of GDP can afford.

The brilliant move to start a trade war against everything and everyone, including the world's penguins, was over after just 13 hours. Also a record of sorts.

Afterwards, Trump took credit for the market calming down. It's like a pyromaniac who lights a fire and then wants a medal for calling the fire department. Beautiful!

Never have so many smart people devoted so much energy to intellectualizing something so stupid. What is Trump's real plan? It's like looking for a pearl in a pool of manure.

Where are we now? Donald Trump's pause means that the general ten percent tariffs remain in place, including against the EU, which of course includes Sweden.

What comes after the 90-day period is unknown, but Donald Trump has made it clear that he expects other countries to bow their heads and give him what he wants.

One country that has not given the slightest indication of bowing is China, which has instead hit back.

This "lack of respect" has led Donald Trump to raise tariffs again to 125 percent.

There is no doubt that China is not a friend of the West and that the country has been quite ruthless, not least when it comes to stealing technology.

And increasingly aggressive military behavior around Taiwan, which China has plans to take over, is a dark cloud over the world.

But a full-scale economic war between the United States and China could be costly for many.

China, whose leaders are not driven by a desire to build a great society, but are blatantly looking to maintain their power and create world domination, has many principles. Showing weakness is not one of them.

The rhetoric that has come from Beijing in recent weeks that “China is ready for any kind of war” and “we will fight to the end” is of course partly propaganda, but at the same time ominous.

The trade war will hit China hard, which is plagued by a huge property bubble that has burst, high debts among companies and in regions, and overcapacity in industry.

Since China is a dictatorship, the great danger lies not only in economic problems such as closed factories and unemployment, but above all in the discontent it creates.

President Xi Jinping's fear of popular protests is great and tolerance for them is therefore very low.

In such a situation, it may seem better to go on the offensive.

China exports goods to the US for the equivalent of 4,400 billion kronor per year, or over 13 percent of all American imports. This is mainly about phones and computers.

Companies in the US must now find other suppliers, probably at higher prices, which could drive up inflation. There are few other sellers of certain goods, such as rare minerals.

But China is also the US's third largest export market, and sells soybeans, oil and aircraft, among other things.

China is likely to try to find other buyers for its goods and cheap goods will flow into Europe. Good for consumers, not so good for European companies. It will also affect Sweden.

In other words, it is set for more turbulence.

China has a number of ways to hit back at the US. Several of the largest US companies such as Apple and Tesla have large sales in China and the regime has great opportunities to make it very difficult for them.

China could also devalue its currency or sell US government bonds. China is the second largest lender to the US with bonds worth 760 billion dollars.

The national debt is the US's greatest vulnerability and further interest rate surges could shake up the world economy. It could also trigger another of Donald Trump's ideas.

Part of the so-called Mar-a-lago plan, designed by advisor Steve Miran, is for the US to force other countries to exchange their US government bonds for new ones that run for a hundred years with a much lower interest rate.

In practice, this would mean that the US would ignore paying on part of its debts.

It sounds crazy, because it would trigger a massive capital flight from the US and could trigger a financial crisis.

But no one can doubt anymore that Donald Trump is ready to try anything, even if it is only for a few hours.

Trust that countries and companies are now making plans to reduce their dependence on the impulsive seven-year-old in the West as quickly as possible.