“China has defied Trump on two things,” Mr John Holden, who leads geostrategic consultancy McLarty Associates’ China practice, explained to me. “First, it has not taken the action on fentanyl Trump demanded. Second, it has quickly and defiantly retaliated tit-for-tat against his tariffs”.
Dr Taimur Baig, Managing Director and Chief Economist at DBS, agrees that the relief over this postponement could be short-lived, as “more sectoral tariffs, including on pharmaceuticals and semiconductors, could be forthcoming”.
WILL THE MARKET GUARDRAIL KEEP HOLDING?
Now, will other countries follow China’s lead in responding to tariffs in kind or fall for Mr Trump’s trap of his pausing tariffs on those countries that have not retaliated?
Governments should not take the bait. Certainly, their efforts to respond to the tariffs should not stop because of the pause.
We are in the most complicated macro and geopolitical environment of our lifetimes. While the market guardrail may have kicked in this time, it did so even with the most economically damaging tariffs remaining.
Investors and government officials alike should not be so confident it will continue to do so.
Steven Okun serves as CEO of APAC Advisors, a geostrategic and responsible investment consultancy based in Singapore. He served as Deputy General Counsel at the US Department of Transportation in the Administration of President Bill Clinton.
https://www.channelnewsasia.com/commentary/trump-tariff-pause-reverse-policy-asia-china-trade-markets-snap-insight-5056631
