By Anjan Roy
Just as Donald Trump’s tariffs had shaken the world and the financial markets, a sudden brake on their implementation had equally shocked leaders to market sloggers as much. President Trump had equally abruptly pushed back the time when his “reciprocal” tariffs were to kick in. He deferred it by ninety days and following that the markets had momentarily surged. He had stalled the tariffs for all countries, but China.
This entire spectacle underlined the total unpredictability and unrealism of the Trump administration. Even his closest associates and officials, including the US commerce secretary, had no idea that this deferment was coming. The sheer unpredictability of the Trump administration had again hit the financial markets and the upsurge was arrested.
But then what had triggered the implementation of his much vaunted tariff measures and beat him into a hasty retreat?. For retreat it was. Trump had boasted that his policy of trade war would not change. He would pursue the measures to the bitter end. He had also bragged that no less than 75 countries had entreated him do some deal and give respite from his augmented tariffs.
He boast itself was also equally ill-mannered using gutter-speak. As usual, Trump had boasted about the tariff measures. But then, in his inner circles the confidence and the spirit to go ahead with the drastic measures across all countries at one go was giving way to more sober thoughts.
According to reports, the US treasury secretary, Scott Bessent, had flown in to Trump’s private residence to underscore the conditions of the markets. The Treasury Secretary had emphasised that the US Treasury market had tanked and this was the pivot around which the Federal Government’s finances ran.
International news agency, CNN, had reported that the US federal government’s bond offer on Wednesday did not attract the immediate attention that it usually received. That is, in the wake of the tariff mayhem, the major buyers of US government debt, were no longer enthusiastic about these. That is, US government was failing to raise debts from the financial markets.
As is common knowledge, governments across the world never really pay up their outstanding debts. They merely borrow afresh to pay back the debts that fall due for repayment. Without this circular movements of funds, the governments would come to a dead halt.
The reciprocal tariffs and the financial markets bloodbath that had followed brought in this prospect of total freeze on the treasuries market. Hence, seeing this prospect Trump realised his folly and ordered an immediate freeze on his tariff plans. It is the state of the US bond market that caused the reversal and forced Trump to make a downright reversal.
Secondly, what had acted as a sober thought was the pouring in of what they call the “lighting of telephones”. That, there any number of telephone calls from business executives and industry leaders who had expressed their concerns over what was happening. Over their telephone calls, these business and industry leaders of America were advising against any further pursuit of these policies of Donald Trump.
The principal voice appears to have been the of Jamie Dimon, the widely respected chief of JP Morgan investment bank. He had predicted very soberly in his annual letter to the bank’s shareholders that US was sleep walking into a recession.
Many others had mentioned of this possibility, including Larry Summers, the highly noted economist and former treasury secretary, who had predicted a recession following the Trump economic package.
“Recession” is a scary word for Americans. It means automatically loss of employment and income. Large scale displacement of workers and financial market upheaval. These are the feared economic situation, far too well known since the 1930s Great Depression.
Even some of the Trump trusted allies and followers had been veering round to the view that America was sliding into a recession and once it triggered in, no one knew when and where it would stop.
Besides, other results were also being seen. The oil prices had slipped and oil exports are a major export for the US. The oil and gas industry were major chunk of US economy. Oil shipment from US to China had almost dried up and that would cause a glut in the market.
All in all, Donald Trump’s image has been dented squarely and he is licking his wounds, though posing as if he was commanding the situation from the success of his threats. Bad end of braggadocio. (IPA Service)
Nagendran Takes Helm of Tamil Nadu BJP Amid Strategic Realignment 