Mexico and Canada have been given a last-minute reprieve from Donald Trump’s tariffs. China has offered only the most half-hearted response to them. At this rate, even the European Union may be off the hook. Equity markets have rallied strongly as the trade war which seems about to crash the global economy appears to have been averted. But has it really? Investors are kidding themselves if they think the crisis is over.
Trump is clearly a leader who likes to get his own way
In the end, it turned out not to be a re-run of the Great Depression, at least not for now. After President Trump slapped punishing 25 per cent tariffs on both Canada and Mexico, along with 10 per cent on everything China sells to the United States, it looked as if the global trading system was about to be ripped up. A trade war would sever supply chains, push up inflation and destroy whole industries.
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