Trump's tariff retreat leaves lasting US scars

Americans have been celebrating their freedom from monarchical rule for nearly 250 years, but Liberation Day will not make it onto the 2026 calendar. 

President Donald Trump's economic version of the Declaration of Independence ended on Wednesday afternoon, less than seven days after he unveiled it with great fanfare in the White House Rose Garden. 

He rolled back most of his reckless tariffs, sparking a rally in stocks, bonds and the dollar, but many national scars will linger.

The retreat, however humbling, is fragmented and temporary. Trump paused so-called "reciprocal" tariffs on other countries for 90 days, but a widespread 10% levy on incoming trade remains.

China, which sent goods worth almost $440 billion to the United States last year, gets thwacked yet again. Its rate was pushed up to 124%, after Beijing officials increased the levy on US imports to 84% earlier in the day. 

Duties on cars and steel also remain in force, as does the threat of future charges on pharmaceuticals and semiconductors. The effective tariff on US imports will end up much higher than the 2.5% level at the end of last year.

Source: Reuters

After factoring it all in, Trump's self-proclaimed negotiating prowess suffers a high-profile setback. 

The former reality-TV host spent a week claiming other governments were clamouring to make a deal, and yet he folded without extracting any visible concessions from even penguin-populated trading partners.

Rival governments will be emboldened to hold firm as the three-month deadline approaches. Cabinet members also have trashed their reputations trying to defend an indefensible policy, whose methodology was laughable. 

Just hours before Trump announced his tariffs pause on social media, Treasury Secretary Scott Bessent argued that the administration was putting Main Street ahead of Wall Street while Commerce Secretary Howard Lutnick repeatedly insisted the tariffs would not be postponed.

Bond markets may have played a more pivotal role than the president's men. The yield on 30-year US government debt spiked above 4.8% on Wednesday from less than 4.4% on Friday, as hedge funds unwound leveraged positions and overseas investors sought refuge in Japanese, Swiss and German assets.

A persistent selloff would have raised the cost of capital across the US economy while risking a disastrous financial crisis. The yields nevertheless remain elevated, in part because the damage already inflicted is not easily reversible. 

Consumers and companies will be feeling the costs of pricier supplies, while nervously bracing for even more unpredictable policymaking.

Trump also has little to show for his signature policy idea. He and his consiglieri have variously touted tariffs as a source of government revenue, a tool to revive US manufacturing, a weapon to tackle persistent trade deficits, and a way to improve economic security. Those dubious rationales now sound even more absurd. All that's left of Trump's economic self-determination dream is the lasting pain of ego-driven isolation.

CONTEXT NEWS

US President Donald Trump on April 9 delayed by 90 days many of the new tariffs that he had unveiled on April 2, triggering a rise in US stocks and bonds.

Trump said in a social media post that he was pausing so-called "reciprocal" tariffs on specific trading partners with immediate effect, but that a lower 10% tariff on US imports will remain in place.

The president added that he was raising the tariff on imported Chinese goods to 125%, after Beijing officials earlier on April 9 lifted the country's levy on US imports to 84% from 34%.

By 1500 New York time, the S&P 500 Index had surged nearly 8%, with shares in United Airlines and Delta Air Lines increasing more than 20%.

The yield on benchmark 10-year US government bonds was trading below 4.4%, down from 4.5% earlier in the day. The US Dollar Index, which measures the greenback's value against a basket of overseas currencies, rose to 102.8 from a low of 101.9 earlier on April 9.