The invisible force threw Trump on his knees. The US president had to give up
In this way, Trump did what he and his employees have excluded in recent days: he gave up. On Tuesday, his spokeswoman Karoline Leavitt assured that the president definitely did not deal with the issue of suspension of duties. However, Trump had no other choice.
The fact that the US President began a trade war at all resulted from what he perceived as “unfair” trade relations with the vast majority of countries in the world. It was not only about import duties imposed by American trading partners, but also about non -tariff trade barriers imposed by other countries.
By announcing duties, the president wanted to force other countries to negotiate. “The phone breaks out”, the White House enjoyed on Tuesday. 70 countries announced a desire to talk. “I don't know when I will talk to them all,” Trump joked on Tuesday. The strategy worked in his eyes.
In the meantime, the whole world economy threatened to slander into the abyss did not bother him. “Keep calm”, he wrote on Truth Social on Wednesday morning, in the face of shares prices falling for several days. He carefully ignored the criticism of his rich donors, such as Bill Ackmann, who lost millions in the assets himself. The manager of the Hedge Fund accused him of calling “nuclear economic winter”. Even Elon Musk publicly criticized the tariff policy and publicly attacked the commercial advisor Peter Navarro. It is “stupid than a bag of stones”, wrote the head of Tesla on X.
Unlike all economists, Trump has never seen a problem in the tariff tool. On the contrary – they would even have positive effects. They would generate “trillions of dollars to reduce our taxes and pay off our national debt,” he said in his speech on April 2, on “the day of liberation”.
The tariffs had serious consequences for the American bond market
In recent days, however, it has become clear that this calculation would not work. There has been a dangerous development of the situation on the bond market. The profitability of ten -year American tax bonds increased to over 4.5 percent. Debt instruments with a 30-year incidence period brought even over 5 percent. This means that profitability increased by over 0.6 pp in just a few days.
This had two serious consequences. Firstly, caused panic among economists. American tax bonds are considered a safe haven, especially in times of uncertainty. If interest rates are growing, borrowing money also becomes more expensive for companies. In combination with a tariff load, it would be a toxic mixture that would fuel a recession.
Donald Trump probably attached even more importance to the latter consistency. This is due to the fact that higher profitability meant that the annual costs that should be paid for US public debt of $ 36 trillion. (139 trill 198 billion 863 million PLN), increased by $ 216 billion. ($ 835 billion) if the increase in interest rates is maintained. Americans already have to pay almost $ 1.2 trillion. (4 trillion 639 billion 748 million PLN) interest. This would reduce any additional duties revenues.
In the afternoon, Trump confirmed that the bond market was partly influenced by his decision. “The bond market is very insidious. I watched him and saw that people had a little nausea,” said the president.
Great relief on financial markets
Financial markets reacted with great relief to Trump's withdrawal. Just a few seconds after Trump's statement, stock prices soared up. The benchmark index DO Jones increased by almost eight percent, and the NASDAQ technological index by about twelve percent.
However, there is no permanent explanation in the trade war.
– says “Die Welt” former deputy representative of trade during the rule of Trump and Biden, and currently the vice president of the Progressive Policy Institute, Ed Gresser.
Although the White House clearly “nervous”, it did not make a complete correction of the course. “It's still a destructive policy,” says Gresser.
