After a week of intensification of market disorders, President Donald Trump fell on Wednesday from the financial crisis, announcing a 90 -day “break” at the exorbitant rate levels which he had imposed on dozens of countries.
It was not a total climb: Trump intensified a trade war with China by hiking at its price up to 125%. And it also keeps a 10% rate in place for other countries. (Details on exactly which countries remained troubled from the afternoon of the south.)
But it was a significant step back.
So why did he do it? Why make such a dramatic announcement last week and recover it relatively soon?
Although the secretary of the Treasury, Scott Bessent, initially said that this pivot was part of Trump’s “strategy”, many external observers considered this focused on the market, both because of the timing and because of the remarks that Trump himself made later (he made later (he (he (he (he (he (he said He changed because people “became Yippy” and “a little afraid”).
Since the announcement of Trump’s “Liberation Day” last week, the shares had lost 10% of their value. Even more worrying: yields of the US Treasury bonds relied. Trump’s team had tried to lower bond yields, both so that the US government would pay less interest in its debt and that the Federal Reserve would reduce rates and drop in loan costs for Americans.
Instead, yields increased, in a way that some feared to wave it outside and cause a financial crisis. It was not what the Trump team expected, so many assumed that it was the reason for Trump’s sudden cave. (“The bond market is very delicate,” said Trump on Wednesday afternoon. “Last night, people became a little uncomfortable.”)
Investors were delighted with Trump’s partial walkback, while actions quickly increased – but not the whole way back at their level of pre -liberation day (they have represented about half of their losses since then).
This relief may largely affect apparent confirmation that, unlike last week appearances, Trump is not totally Unbound to market the reaction and lobbying, disconnected from reality and willing to destroy the commercial environment. The change also suggests that advisers lined up by Wall Street like Bessent have acquired the upper hand over anti -trame fanatics like the advisor of Trump Peter Navarro – at least.
But there will probably be more tumult to come. Trump’s trade war with China is still underway. And although Trump’s team intends to conclude agreements with all the other countries it has targeted, it is far from clear how such transactions could realistically reach Trump’s (bizarre) goal to bring the United States to a trade surplus with each major trading partner.
In addition, chaos and uncertainty caused by Trump can have a lasting effect, business planning and damage to the economy. Because if he provoked such a mess once, how do we know that he will not start again?
