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Trump starts to cave on tariffs, don't be fooled. [1]
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Date: 2025-04-09
This is just a quick one and details will emerge later.
Effective immediately all reciprocal tariffs announced except those on China are now dropped to 10%. That 10% will remain on everyone. In response the stock market is surging.
But this is one of those pauses, in this case 90 days. This is akin to a Russian good will gesture retreat from Kyiv without having made any other territorial gains. This is a massive failure of the Trump tariff strategy and will leave him in a much weakened negotiation position going forward. It is admission that Trump couldn’t take the heat even before the real heat happened. Trump by excluding China is still hoping to make this more one on one, but with the 10% still on is unlikely to get much support from others. What ever spin is put on this is a massive loss.
So a quick take on this is that chances of recession are reduced, but little has changed on the Stagflation front. A more moderate slowdown will most likely still continue to occur. We really will have to see over the rest of the week how this all shakes out. There still will be inflation effects and things like the price of oil that have been dropping and would mitigate some of that are likely to rise. Chinese tariffs now at 125% are still in effect and that is going to constrain growth as the consumer facing business are still going to have to work with that.
The problem for Trump is that this does nothing to change the uncertainty that has been a drag of business just extends it.
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