He definitely blinked. The US were getting destroyed on the bond markets. He had no other chance than to give up his "tariff the whole fucking world"-play and focus on the main foe: China. The country with which trade is most unbalanced, the country which has stolen the most American jobs and IP, the country which has manipulated trade the most, the country which is the main geopolitical rival of the US.
Truth be told, he should have rolled out a more thought-out and focused tariff strategy from the get-go. The escalating trade war with China will cause enough economic turmoil all by itself. This, however, is a fight which is imho worth fighting.
I expect some negotiated trade agreements with Canada, Mexico, Japan, South Korea and Europe which aren't much different than the status quo ante and mostly serve to save face. But again: things will get spicy enough on the China front.
Yeah i agree. Him and his team probably expected as stocks get whacked as there is growing uncertainty about trade and earnings, you would see outflow from stock into UST's. That's typically what happens in risk-off scenarios the 'flight to safety'. Bonds caught a bid somewhat and 10yr dropped to ~3.9% only to do a 180 and go back up to 4.4%, a huge sell off. I still don't know if that was caused by China/others selling US bonds or just general market uncertainty and everyone going into cash as a safeguard. Between business leaders probably freaking out, all the banks/analysts guiding down S&P targets, bonds selling off, he probably got talked into relaxing the tariffs.
At the end of the day, we still have 10% tariffs across the board and 125% with China. If those stick, that alone is still bringing in hundreds of billions in tariff revenue. We bring in ~3.1trillion annually, 10% of that is 300 billion, 125% on Chinese imports of ~460BN would also add a significant amount. I actually think when this is all said and done, we will still have some tariffs that remain, and we will actually bring in some revenue from that but not the 22% blended tariff rate that was initially propose, most likely be around 10% range.