US and China agree to slash tariffs for 90 days

[muriel_volestrangler]

4. "The USA just surrendered to China"

This mornings’ press conference was a classic: Let’s be honest about what happened – the USA started a trade fight. China slapped them back. Greer sounded offended when he reminded us they were the only country to retaliate – everyone else wanted to negotiate – hence the ratcheted up to the 145% tariff bill. Yet, by retaliating – China is now on same broad terms as the USA’s no 1 ally, the UK? Classic bully story. Bully hits someone. Someone hits back. Bully stands down.

There were so many conflicting narratives being proposed by the Bessent/Greer double-act. Apparently, it’s all about Fentanyl – Bessent cited the Chinese willingness to support the US crushing the Mexican gangs flooding the USA with Fentanyl. Or it’s about how the terrible state of US/China trade was due to the last 4 years of the Biden administration allowing trade negotiations to “atrophy”. Or maybe it was about about the deal being part of rebalancing of US supply chain weaknesses post Covid.
...
It also raises the fundamental issue – the USA can’t afford a trade war. The USA is indebted to the tune of $36 trillion. Trump is promising the big beautiful bill to cut taxes. But as DOGE’s failure showed, he can’t cut spending. The US Military costs nearly $1 trillion per annum and is the only substantive item that could be cut – which he can’t as he has stirred up global tensions. In the Treasury market there is the truth about the US – watch what happens next.

More to the point, a trade/inflation shock is still going to occur as a result of his actions. The upside is it might be slightly less damaging that initially feared. He is unlikely to deliver any of his MAGA promises to voters – except on immigration, which I expect he will big-up to deflect from his trade and economic failures.

https://morningporridge.com/blog/trade/the-usa-just-surrendered-to-china/