The editorial board of the traditionally conservative Wall Street Journal, for a long time one of the most severe critics following President Donald Trump's tariff policies, let out a sigh of relief after Trump announced On Wednesday, he announced that he would lower the "reciprocal tariff rate" to 10 percent for all nations except China for a duration of three months. This move imposes a significant levy on imported goods, yet this tax will be notably reduced—at least temporarily—from what had been predicted to potentially trigger an economic downturn before the end of the year.
Initially, Trump intended to implement varying rates. ranging between 10% and 49% Depending on the size of the U.S. trade deficit with the specific country, he asserts that this break will provide nations with an opportunity to negotiate with him.
The markets cheered with a stock market surge fueled by the hope that maybe Mr. Trump has some awareness of the harm he’s inflicting," noted the board. "The sell-off in dollar-denominated assets subsided, albeit partially, and the increase in the 10-year Treasury yield slowed down. This could hardly serve as stronger proof that markets see Mr. Trump’s tariffs as the primary danger to global economic stability.
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Nevertheless, the board stated that even with the market rally, the "chaos caused by tariffs" is not yet concluded.
"The administration appears inconsistent with its messaging. Shortly after Treasury Secretary Scott Bessecker informed bankers that the economy was ‘in fairly good condition,’ he downplayed the recent turmoil in the bond market as typical trading activity. So, the question remains: Why did they decide to halt new tariffs?" the editorial board noted.
And then there's China, where the trade war is still very much ongoing.
He initiated the most recent conflict by imposing an additional 34% tariff atop those already enforced, and China retaliated on Tuesday with a reciprocal measure. In response, President Trump increased the rate by another 50%, resulting in a cumulative U.S. tariff of 104% on Chinese products. Consequently, Beijing countered by boosting their tariff by 50% as well, setting it at 84% on all American goods exported to China, along with introducing various regulatory obstacles targeting U.S. businesses. Following this escalation, Mr. Trump raised the tariffs on Chinese imports to 125%.
If Trump genuinely aims to disentangle the U.S. economy from China—an enormous and challenging task—he ought to focus on lowering trade barriers with Europe, Latin America, and other American allies, as stated by the board. However, he is only somewhat diminishing the impact of the new trade obstacles he’s erecting.
“Never wager against America,” as the saying goes, and typically international investors avoid it,” the board determined. “The fact that they are being provoked into doing otherwise underscores the severity of Mr. Trump’s error with tariffs. What he requires is a shift in policy, rather than a temporary halt.”
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