Unfortunately, the White House – no one believes the claim

Trump blinked first

Wolfgang Hansson

This is a commentary text. Analysis and positions are those of the writer.

Updated 17.26 | Published 16.07

No one believes the White House’s claim that Trump’s complete turnaround was planned.

It was the market that broke him.

The US president is playing a high game, but he was the one who blinked first.

However, in the midst of all the relieved stock market sourness, it is easy to forget that Trump has imposed ten percent tariffs on the entire world. They remain.

Quick version

• President Trump imposed high tariffs on goods globally, which caused economic and political reactions around the world.
• Market reactions and rising long-term interest rates forced Trump to pause his tariffs, which signaled a weakened negotiating position for future talks with other countries.
• Trump's volatile behavior and unexpected policy changes have damaged the US's reputation as a reliable trading partner on the global stage.        
  

         

          Andreas Cervenka: "Trump has been under heavy pressure"

          3:41

Trump and his economic advisers claim that the plan to impose the tariffs all along was to force other countries to come to the negotiating table.

In that case, the tariffs were a completely unnecessary maneuver.

The EU has been trying to negotiate with the US for weeks. So have a number of other countries. But interest from Trump has been minimal, if not non-existent.

Photo: Evan Vucci/AP

Perhaps it was a tactic to keep countries on their toes in order to "soften" them up. Make them more willing to meet the US.

But Trump was taking the entire world economy into the abyss with his aggressive attitude.

He was prepared for major (in his eyes temporary) stock market falls. He could put up with violent criticism from political opponents.

But when long-term interest rates began to rise at the same time as the stock market fell, all the warning lights flashed red. The United States ran the risk of having interest rates on its gigantic national debt sharply raised. It already pays a thousand billion dollars a year in interest.

The threat of a new financial crisis loomed large.

It had been a development directly opposite to what Trump had wanted to achieve with his tariff war.

           

      White House press secretary Karoline Leavitt met the press together with Treasury Secretary Scott          Bessent on Wednesday. Photo: Jacquelyn Martin / AP

Trump also received signals fromf leading Republican senators and businessmen that support for Trump's tariff plan was beginning to reach the end of the road.

We should also send a thought of gratitude to China. It was Xi Jinping's decision not to back down but to respond with counter-tariffs that contributed to the US bond market rushing up at a time when interest rates should normally have fallen.

Perhaps Trump also glanced at the opinion polls and saw that his popularity had fallen sharply in the past two weeks. Party colleagues warned him that if he continued, the Republicans would lose the mid-term elections next year.

It took 13 hours from the time the tariffs were imposed to Trump pausing them. This probably says a lot about how the president constantly shoots from the hip rather than following a set plan. The Treasury Secretary and other advisers are trying to save Trump from looking weak, but because their stories constantly differ, the effect is instead a sense of ongoing total chaos.

Trump tried to save face by further raising tariffs on China, but that could not hide the fact that he was the one who blinked first in the tariff war.

When he is now going to negotiate with the 75 countries that he says are in line, it is from a weakened position. Everyone now knows that Trump does not dare to go against the market's reactions, which will make countries less inclined to meet the US.

 

Wall Street rose more sharply on Wednesday. The Nasdaq's tech index had its best day since 2001. Photo: Richard Drew/AP

Especially since the very basis for Trump's  tariff calculations consists of purely made-up figures. The world remembers how Trump backed down on tariffs even the last time he was president.

A warning must be issued to the outside world, however.

The relief that now arises when Trump has backed down is a result of the fear of a depression in the world economy being so strong.

That risk is not gone.

After all, Trump has managed to impose ten percent tariffs on goods from all over the world. A completely unique measure that, at least in the short term, will generate income for the US treasury.

The rest of the world cannot quietly accept this tariff increase. In the negotiations, it is important to start from the situation that prevailed before Trump introduced new tariffs. Otherwise, Trump has already won a victory at the start of the talks.

However, the US will have to pay a price.

Trump's way of handling the tariff issue has seriously damaged the trust of the rest of the world in the US as a reliable trading partner.

The message is constantly changing. No one knows what will be the case. Trump could change his mind again at any time and impose even higher tariffs or make other decisions that negatively affect the rest of the world.

The uncertainty and chaos are eroding the confidence of the US as a nation.

In Germany, voices are being raised to bring home the country's gold reserves that are in the vaults of the US Federal Reserve. Leading German politicians no longer trust the US and want to take the gold home.

Similar signals are coming from many other countries.

In the long run, the US and American consumers risk being the big losers from Trump's love of tariffs.

Now 90 days of a new roller coaster await as Trump negotiates with the whole world at the same time. The risk is that it will continue to be a very shaky journey.