<p>US President <a href="https://www.deccanherald.com/tags/donald-trump">Donald Trump’s</a> decision to pause his additional reciprocal tariffs on all countries except China has calmed nerves, but the unprecedented nature of the making and unmaking of financial decisions could also end up unnerving the world. Trump had unleashed a trade war on the entire world but has now declared a partial ceasefire. China now faces tariffs to the tune of 125 per cent and other countries face a basic 10 per cent for the next 90 days. </p><p>The Tughlaq-like decision-making had all the arbitrariness and unpredictability associated with Trump. Modern economic history has no record of such erratic actions. It would have been difficult to believe that momentous decisions that affect the global economy would be taken so casually. The global trade war has now been reduced to a bilateral trade war between the two economic superpowers. The consequences are unpredictable. </p>.<p>It is not known why Trump made the retreat after declaring war with such bravado. It could have been the meltdown in equity and bond markets and responses from circles close to Trump. There was a sense of anxiety and apprehension among the general public in the US about the consequences of the trade war. </p><p>Trump had dismissed all such fears as unreal but he may have, according to a school of thought, felt that there was some truth in them. There is also a view that the whole drama was played according to a script written earlier to isolate China and unleash an economic war on it. This is hard to believe because it is difficult to sustain a tariff war with China without involving other countries. Trump had raised tariffs on Chinese goods in his previous stint as President, and China and the world were expecting it again from Trump 2.0.</p>.Tariff reprieves won't repair trust in America.<p>The flip-flop has created an extreme sense of uncertainty in the whole world, and it will negatively impact long-term economic decisions. Even those who thought that there was a method to Trump’s madness now believe that there is no method to speak of. Financial markets hate uncertainty and economic decisions need logic, stability and predictability. It has been observed that while decisions can be taken and revoked in a few days, supply chains take years to build and decades to develop. Management of the world’s largest economy needs to be done with a great sense of responsibility. A tariff war between the world’s top two economies can have major consequences for both, and the rest of <br>the world. It is also not known whether there will be more twists and turns in the drama that has unfolded so far. Trump’s statement that he expects a ‘’good deal with China’’ adds to the uncertainty.</p>
<p>US President <a href="https://www.deccanherald.com/tags/donald-trump">Donald Trump’s</a> decision to pause his additional reciprocal tariffs on all countries except China has calmed nerves, but the unprecedented nature of the making and unmaking of financial decisions could also end up unnerving the world. Trump had unleashed a trade war on the entire world but has now declared a partial ceasefire. China now faces tariffs to the tune of 125 per cent and other countries face a basic 10 per cent for the next 90 days. </p><p>The Tughlaq-like decision-making had all the arbitrariness and unpredictability associated with Trump. Modern economic history has no record of such erratic actions. It would have been difficult to believe that momentous decisions that affect the global economy would be taken so casually. The global trade war has now been reduced to a bilateral trade war between the two economic superpowers. The consequences are unpredictable. </p>.<p>It is not known why Trump made the retreat after declaring war with such bravado. It could have been the meltdown in equity and bond markets and responses from circles close to Trump. There was a sense of anxiety and apprehension among the general public in the US about the consequences of the trade war. </p><p>Trump had dismissed all such fears as unreal but he may have, according to a school of thought, felt that there was some truth in them. There is also a view that the whole drama was played according to a script written earlier to isolate China and unleash an economic war on it. This is hard to believe because it is difficult to sustain a tariff war with China without involving other countries. Trump had raised tariffs on Chinese goods in his previous stint as President, and China and the world were expecting it again from Trump 2.0.</p>.Tariff reprieves won't repair trust in America.<p>The flip-flop has created an extreme sense of uncertainty in the whole world, and it will negatively impact long-term economic decisions. Even those who thought that there was a method to Trump’s madness now believe that there is no method to speak of. Financial markets hate uncertainty and economic decisions need logic, stability and predictability. It has been observed that while decisions can be taken and revoked in a few days, supply chains take years to build and decades to develop. Management of the world’s largest economy needs to be done with a great sense of responsibility. A tariff war between the world’s top two economies can have major consequences for both, and the rest of <br>the world. It is also not known whether there will be more twists and turns in the drama that has unfolded so far. Trump’s statement that he expects a ‘’good deal with China’’ adds to the uncertainty.</p>
