US President Donald Trump’s Friday tariffs deadline did what it was always intended to do. It kept the markets and the nations guessing amid last-minute uncertainty.
It attempted to reassert the global heft of the US economy to take on and master all comers. And it placed Trump at the center of the story, where he always insists on being.
In the event, there were some last-minute agreements struck this week, few of them fair or rational in trade terms, most of them motivated by the desire to generate some commercial order. Some conflicts are still in the balance. There were 11th-hour court challenges, too, disputing Trump’s right to play the trade war game in this way.
Even now, no one, probably including Trump himself, knows whether this is his administration’s last word on US tariffs. Almost certainly not. That is because Trump’s love of tariffs is always more about the assertion of political clout rather than economic power. Trump’s antipathy toward the EU drives one example. The pact agreed by European Commission President Ursula von der Leyen in Scotland last weekend underlines that the EU’s aspirations as a global economic superpower exceed its actual clout. The EU could not prevent Trump making European goods 15 percent more expensive if they sell on US markets. Nor could it stop Trump getting EU tariffs on US goods withdrawn.
Equally eloquent about the global balance of economic power is that Trump has not been able to force China to bend the knee in the manner of the EU. China has responded aggressively to Trump’s tariff threats, retaliating with tariffs of its own and blocking the sale of commodities, including rare-earth minerals, that the US most covets.
Unsurprisingly, this standoff has not produced one of Trump’s so-called deals. Friday’s deadline has been reset for later in the month. It would be no surprise if it was eventually pushed back further.
Trump is not imposing tariffs on the rest of the world to promote global trade or boost the US economy. He is doing it, in part, because the US Congress has delegated this power to him, allowing him to impose or waive tariffs at will. He uses this power for many purposes.
These include raising government income without congressional oversight and also, because tariffs are regressive, shifting the tax burden away from the very rich, such as Trump himself, on to the middle and working class.
However, economics also comes way down the field in the list of reasons why Trump is wielding the tariff weapon internationally. US talks with Brazil — with which the US runs a trade surplus, not a deficit — have been hijacked by Trump’s grievance over the prosecution of former Brazilian president Jair Bolsonaro for trying to overturn his 2022 election defeat.
Talks with India are deadlocked, because Trump wants to penalize New Delhi for buying energy and weapons from Russia. Those with Canada have been hit by Trump’s objections to Ottawa’s plan to recognize Palestine.
However, the ultimate test of the policy would indeed be economic. For now, financial markets appear to have decided that Trump’s tariffs are manageable. If tariffs now raise the cost of goods on US high streets, slowing growth and feeding inflation, as they might, the wider market response could change quickly.
In that event, the mood among US voters might even shift, too.
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The central bank and the US Department of the Treasury on Friday issued a joint statement that both sides agreed to avoid currency manipulation and the use of exchange rates to gain a competitive advantage, and would only intervene in foreign-exchange markets to combat excess volatility and disorderly movements. The central bank also agreed to disclose its foreign-exchange intervention amounts quarterly rather than every six months, starting from next month. It emphasized that the joint statement is unrelated to tariff negotiations between Taipei and Washington, and that the US never requested the appreciation of the New Taiwan dollar during the
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