Donald Trump has peered into the abyss. The US President watched the Wall Street meltdown and the global trading system (from which America benefits as much as anyone) start to collapse, and he hit pause. The conventional narrative will be that Trump has blinked, but I think he simply got what he wanted.
Yesterday’s decision to put a 90-day pause on reciprocal tariffs, while increasing the rate on China to 125 per cent, has certainly come as a relief to the markets. The S&P500 was up almost 9 per cent on the news. Investors can breathe again.
It would be easy to argue that President Trump has simply chickened out of the fight. The tariffs were about to trigger a global recession, and the fallout from that would dominate the rest of his time in the White House. It is not worth it.
And yet that ignores an obvious point. The rest of the world has been terrified into submission.
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